Saturday, January 18, 2014

Most early ACA signups so far were previously insured. Is that bad?

The Wall Street Journal is today trumpeting a study by McKinsey and other insurer broker-supplied data suggesting that the vast majority of ACA signups to date were already insured:
Only 11% of consumers who bought new coverage under the law were previously uninsured, according to a McKinsey & Co. survey of consumers thought to be eligible for the health-law marketplaces. The result is based on a sampling of 4,563 consumers performed between November and January, of whom 389 had enrolled in new insurance....

Health Markets Inc., an insurance agency that enrolled around 7,500 people in exchange plans, said 65% of its enrollees had prior coverage. Around 10% were dropping out of employer coverage, either because the employer stopped offering its plan or because they could qualify for subsidies on the marketplaces. Fifteen percent had previous individual plans canceled, and 40% decided to switch into coverage bought through an exchange from previous individual plans.
Near the end of the article, reporters Christopher Weaver and Anna Wilde Mathews offer key contextualizing information, brought into focus by Kaiser's ubiquitous Larry Levitt:
It isn't surprising that some percent of new purchasers of private health insurance are people who had insurance before. About 66% of people buying new individual health plans in early 2011 were covered by employer-backed plans in late 2010, according to a Kaiser Family Foundation analysis of federal survey data prepared for The Wall Street Journal. About 20% of enrollees in early 2011 were previously uninsured, the analysis found.

There is "massive churn in the individual market, and always has been," said Larry Levitt, senior vice president at Kaiser. "It wouldn't surprise me if many [health-law enrollees] were insured in the last year," he said, but "that doesn't mean they wouldn't have ended up uninsured if not for the exchanges."

A few further thoughts about these stats, to the extent that they're an accurate reflection of the market thus far:

1) It is perhaps not that surprising that those accustomed to shopping for insurance would be quicker to buy on the exchanges.

2) According to HHS, 79% of those enrolled in exchange plans so far qualified for subsidies. It does seem surprising that a high percentage of those buyers were already able to afford insurance on the individual market. Perhaps current signups, at least those coming from the indvidual market, lean toward the higher end of the subsidy scale, say 200-400% of the Federal Poverty Level.

3)  Weaver and Mathews emphasize insurers' worries that they're not getting new customers so much as churned existing ones. On the other hand, the already-insured are likelier to be healthier than the uninsured,  perhaps easing worries that the early risk pool will skew too sick.

4) The WSJ's Theo Francis reported yesterday that a loophole in the ACA has left many "bare bones" employer-sponsored plans intact -- including plans that don't satisfy the individual mandate. Employers must offer an ACA-compliant plan but can continue to offer non-compliant plans as well, including "fixed indemnity" plans, which offer a menu of services for a modest price, but each service only up to a fixed limit (e.g., $75 ER visits up to $300 per year). This kind of plan has low premiums and is attractive to low income workers, though it leaves them on the hook for enormous expenses if they blow throw a cap on a given service.  Perhaps ACA subsidies, including deductible/out-of-pocket subsidies, are inducing some low-income workers to drop such plans for exchange coverage. That would be a good thing. The Journal article spotlights a move from some small market employer coverage more generally:
Danny Robins, a Columbus, Ohio-based insurance broker for LyfeBank, a national consultant, said he has dismantled about 50 small employer-backed plans, some of which are steering workers to the new marketplaces.

The 47-worker StateWide Ford dealership in Van Wert, Ohio, ended group coverage effective Jan. 1. About 23 workers previously covered by the StateWide-sponsored plan gained other coverage. Two enrolled in Medicaid, several joined their spouse's employer-backed plans, and at least two gained federal subsidies to buy coverage in an health-law exchange.

All but one worker got coverage at a better price, said Andy Czajkowski, the dealership's owner. Now that insurers can't charge unhealthy people higher rates, he said, the workers are better off on their own.
5) Like the young, the uninsured may come later. They skew lower-income, are less tech-savvy and financially savvy, and need vigorous outreach that is only now really ramping up.

P.S. I was just about to add here a reminder to myself, courtesy of Adrianna McIntyre, that reading the risk pool tea leaves at this early point is of limited value, as information is just too limited, when LOLGOP pointed me to yet another caveat:

Update 2: Outside the McKinsey study, the data in the WSJ story came from brokers, not insurers -- a fact that prompted this exchange:


1 comment:

  1. All but one worker got coverage at a better price, said Andy Czajkowski, the dealership's owner. Now that insurers can't charge unhealthy people higher rates, he said, the workers are better off on their own.

    How can it be that they got coverage at a better price if they are now paying thier own policies with post tax dollars and before the policies were paid by the company with pre tax dollars. It seems to me that both the company and employee lost out. Now the company has to pay highter unemployment taxes, higher amount of workman's insurance and matching SS monies. The employee has to pay more witholding and then pay part of the ins policies that were paid by the company before. This is off the top of my head but I woned a company for 38 years and paid 100% of my employee's insurance and saved money that way.