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Policy

Why ACA (Obamacare) Enrollment Matters: Implosion of Health Insurance

A weekly update of state exchange enrollment numbers is looking impossible at this point. The state exchanges have moved to the federal model of reporting exchange data on a monthly basis. A few states like Kentucky have continued to report their success at enrolling people into the Obamacare exchanges. But new official data from the state exchanges is hit and miss at this point, which means the initial predictions and data from the first week will have to remain in a holding pattern.

Until the official numbers are out, I thought I would answer a pertinent question: Why does Obamacare enrollment matter? Why should we care how many people the government/states sign up each week or month?

The answer: The financial sustainability of Obamacare.

Open enrollment into Obamacare continues until March 31, 2014. If you want insurance that begins on January 1, 2014, you have to sign up by December 15, 2013. As I’ve written previously, these two dates are likely set up for large enrollment pushes by the Obamacare navigators. More importantly, March 31 is the date by which the White House needs enrollment to hit 7 million people to make Obamacare sustainable. If 7 million people are not signed up by March 31, the nonpartisan CBO projects Obamacare will become financially unsustainable.

This risk of financial unsustainability in Obamacare is why liberal blogs like Mother Jones are only partially right when they say first week enrollment does not matter. In the short term, isolating the very first week as the standard of success is wrong and meaningless. However, in the long term (which isn’t very long), Obamacare needs large success each week in order to meet the 7 million goal.

Some quick numbers on Obamacare:

  • 7 million: The number of signups needed between October 1, 2013 and March 31, 2014 for ACA to remain sustainable.
  • That gives the Federal government and the State exchanges 6 months (or 26 weeks, or 184 days) to enroll 7 million people
  • 1,167,000: The average number of people the government needs to have enrolled each MONTH.
  • 269,000: The average number of people the government needs to have enrolled each WEEK
  • 38,000: The average number of people a DAY the government needs to enroll.
  • 51,000: The number of people the Daily Mail estimates signed up on the federal exchange the first week. 6,200 of these were from the first day. Leaving us: 95.6% short of the monthly goal, 81% short of the weekly goal, and the Feds missed the daily goal by 83.7%.
  • 1%: The percentage of completed applications being sent in from the federal exchange with enough data to enroll a person in insurance. 99% of applications currently lack the data needed to sign a person up, which means there will be many people on January 1st who think they have health insurance, but don’t and will have to pay the penalty.
  • 2.7 million: The number of people aged 18-35 needed from the 7 million to make Obamacare sustainable. The problem? That very demographic is opting out of Obamacare because prices are too high. If we reach 7 million without having this number of young people in it, Obamacare will still be unsustainable.

Something else to keep a pulse on: How many people enrolled have been counted multiple times? This is a problem according to Robert Laszewski, President of Health Policy and Strategy Associates, LLC (HPSA):

Here is one example from a carrier–and I have received numerous reports from many other carriers with exactly the same problem. One carrier exec told me that yesterday they got 7 transactions for 1 person – 4 enrollments and 3 cancellations.

For some reason the system is enrolling, unenrolling, enrolling again, and so forth the same person. This has been going on for a few days for many of the enrollments being sent to the health plans. It has got on to the point that the health plans worry some of these very few enrollments really don’t exist.

The reconciliation system, that reconciles enrollment between the feds and the health plans, is not working and hasn’t even been tested yet

In short: Obamacare may very well implode under its own weight. If an implosion does not occur, a shortage of people would cause prices to go up. We have already warned that prices will go up because healthcare costs are still going up at an unsustainable pace, creating a healthcare bubble like we have seen with student loans. We aren’t the only ones waving a warning sign over bad numbers on Obamacare. Financial guru, Dave Ramsey, agrees with our assessment of the situation:

The numbers may be early on Obamacare, but there are many warning signs. An implosion of Obamacare or out of control costs will affect everyone in the healthcare insurance market (that is everyone since PPACA was enacted). These reasons are why Obamacare enrollment matters: if the government is incapable of signing people up, costs will go up. The very worst case scenario would be economic destruction in the healthcare industry.

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