Yesterday’s enrollment report from HHS has much less to do with age than you might think. A large proportion of the 2.2 million sign-ups on the new insurance marketplaces* are likely individuals who were already paying full-freight for individual coverage. Now that these folks qualify for a tax credit subsidy, they have traded unsubsidized policies for subsidized ones in order to save money.
So how does that help to explain the age distribution among marketplace enrollees? Easy: those in the individual insurance market in prior years skewed disproportionately older relative to the uninsured population. While persons age 35 to 64 comprise 50% of the uninsured population in 2012-13, they made up 70% of the individual insurance market.** If previously-insured individuals comprise a disproportionate number of the 2.2 million enrollees that HHS announced yesterday, then we should expect enrollment to skew older as well. Which, in fact, is what we see from yesterday’s report.
Then what might these enrollment figures actually show? For starters, we can infer that federal subsidies have lowered the insurance costs for many families who had prior coverage. And the fact that many of these individuals and families were previously paying health insurance premiums means that they had already budgeted for insurance. Thus, a high proportion of the enrollees to date will likely to pay their insurance premiums going forward. Those are arguably good things.
But the real story here is that the marketplaces may not be signing up the uninsured. Yes, the ACA has effectively expanded coverage, particularly for the 3.9 million individuals who were able to sign up for Medicaid thus far. But the jury is still out on whether uninsured Americans above the Medicaid threshold are actually enrolling in the tax credits and qualified health plans. As we’ve argued before, uninsured individuals will not sign up until they have the cash to do so, which is when they start getting their tax refunds in early February (and not during the holidays). Bottom line: If you hope to sign up the uninsured, you can’t compete with Christmas; you’ll always lose.
So what are the key “take aways” from yesterday’s report? Well, open enrollment is now more than half over, and HHS has achieved only about 31% of its target of 7 million enrollments.*** Fortunately, though, uninsured individuals still have time to sign up through the end of March – and the federal government is about to begin mailing approximately $320 billion in annual tax refunds, which many families can use to pay their new premiums. Timing and taxes may yet conspire to make this open enrollment a success.
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* U.S. Department of Health and Human Services, “Health Insurance Marketplace: January Enrollment Report,” January 13, 2014, available at http://aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Jan2014/ib_2014jan_enrollment.pdf, accessed January 13, 2014.
** Estimates computed from U.S. Census Bureau, Current Population Survey, Annual Economic and Social Supplement, 2012-13 using CPS Table Creator tool, available online at http://www.census.gov/cps/data/cpstablecreator.html, accessed January 14, 2014.
*** CBO's May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage, available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCoverage_2.pdf, accessed January 13, 2014.
Senior Vice President for Health Policy
Jackson Hewitt Tax Service Inc.
Cell: (615) 761-6929