Two states, Delaware and Connecticut released data today providing contrasting pictures of the rollout of the Affordable Care Act. The news from Delaware is bad for supporters of the ACA; the news from Connecticut is much brighter. Taken together, the news confirms a point I believe bears repeating.
It is a mistake to write a single narrative of the rollout of the Affordable Care Act. There are in fact at least 50 different rollouts of the individual Exchanges and many different narratives, each of which may have elements of truth. Based on what we have seen thus far, there are likely to be some states in which the Exchanges and the policies sold in them are relatively stable and at least the goal of greater access to healthcare is substantially met. Connecticut sure looks like the first poster child for success. There are a number of others, however, such as Delaware, in which, unless there is a massive surge, the individual Exchange based system of policies without medical underwriting will not be increasing access to medical care as hoped and in which insurers are likely to feel increasing discomfort in continuing to write policies under the existing regulatory regime.
As of last Thursday, December 12, 2013, only 793 people in Delaware had selected a plan on the individual Exchange and paid the first premium. Since fewer than 431 had done so as of the end of November, this means that somewhere between about 25 and 62 people per day are selecting for a plan in Delaware and paying the premium. This is better, of course, than when healthcare.gov was not working, but it is still an inadequate rate of growth in the insurance pool. If the pace of this “surge” continues for the rest of the year, including the holiday season when attention may be elsewhere, it means that fewer than 2,000 people in Delaware will have insurance coverage when it begins on January 1, 2013. Delaware was projected to have 13,898 enrolled through 2014.
The number in Delaware is particularly troublesome for a variety of reasons. First, about 265 people from Delaware were previously enrolled in the federal Pre-existing Condition Insurance Program (PCIP), which will end as of December 31, 2013. This means that the number of newly insured Delawareans may be less than the 2,000 discussed above. Some will just be substituting expiring PCIP policies. Moreover, to the extent the individual policies purchased in Delaware on an Exchange are comprised significantly of people evicted from the PCIP, it means that a significant portion of the purchasers in Delaware will be those known to have high medical expenses.
Second, numbers such as 2,000 on the positive side are troubling due to estimates that 12,000 Delawareans saw their individual policies cancelled in 2013 presumably due to failure to provide Essential Health Benefits. And, even though Delaware is among those states that is permitting insurers to “uncancel,” unless almost all of the insurers do so and unless almost all of their insureds re-enroll, the result in Delaware could actually be an increase in the number of uninsured persons. Moreover, the greater the proportion of Delawareans who retreated back to their faux-grandfathered policies as a result of the Nov. 11, 2013 change of mind by President Obama, the fewer of those mostly healthy individuals likely to offset the more expensive persons enrolling via the Exchange.
Finally, if there end up being, say 2,000 people who purchase policies in Delaware by the time coverage starts, the economies of scale that insurers need to make the system work may not be present. Some insurers who have, say, higher priced Gold policies may find that there are fewer than 20 people in their insurance pool. Numbers like that don’t work well for the insurance industry.
The news from Connecticut should be at least as encouraging for supporters of the ideas behind the ACA as the news from Delaware should be discouraging. According to information released today, 1,400 people per day are enrolling in individual policies in Connecticut’s own Exchange and the total enrollment is surging up to 20,000. Should the pace of 1,400 per day continue, Connecticut could have 40,000 enrollees by January 1, 2014. To be sure, there is likely to be some shrinkage between enrollment and the actual payment of premiums — a figure Connecticut does not appear to have yet released. Still, having even 35,000 true insureds by the start of 2014 would be a show of great strength and stability for the ACA; Connecticut was projected to have 58,637 enrolled through 2014.
Not only are the absolute numbers encouraging in Connecticut, so too are the characteristics of the enrollees. Nationwide, at last report, only 41% of the enrollees had incomes below 400% of the federal poverty level that entitled them to a subsidy; 59% came from wealthier Americans for whom, perhaps, programs simpler than the stunningly elaborate ACA might have been more sensible. (Note: these figures may be off slightly because, it was released today, California had released its information backwards!) In Connecticut, however, 70% of the enrollees apparently qualify for a subsidy. The middle class and the lower middle class are buying to a greater extent. Moreover, the types of policies being purchased in Connecticut, mostly Silver plans, are inconsistent with fears that policies are being purchased primarily by those with higher projected medical expenses. As discussed earlier on this blog, disproportionate purchases of Gold and Platinum plans could be a harbinger of adverse selection problems.
In short, Connecticut is behaving pretty much as the models used by those who promoted the ACA, thought the rest of the nation would behave. The question now, however, is whether Connecticut and perhaps a few other states will be outliers that happen to conform to the behavior of its neighbor, Massachusetts, on which some of the modeling was predicated. Perhaps, proponents of the ACA should hope, people from Connecticut just procrastinate less and the rest of the nation will rapidly come around to behaving the way that the ACA requires if its projections and aspirations are to bear out.
Delaware is the first jurisdiction I have seen to publish the number of people who have both selected a plan and actually paid the first month’s premium. Other figures tend to be the larger category of people who have selected a plan. As any electronic shopper knows, there is a big difference between putting something in one’s electronic shopping cart and actually getting the credit card out and hitting “Pay.” So, kudos to Delaware. I would like to see other jurisdictions follow suit.