From the Insurance Business News Webblog 4/7/14:

 

President Barack Obama and his administration applauded the fact that roughly 7,040,000 Americans signed up for health insurance under the Affordable Care Act through this Monday. Skeptics in the insurance industry, however, met the news with decidedly raised eyebrows.

While the late surge in applications for health insurance definitely pushed the final enrollment figures over the edge, a number of unanswered questions remain. Some of these will play a big role in deciding the solvency of healthcare reform and health insurance rates going into 2016.

Insurance Business took a look at three of the most pressing questions surrounding Wednesday’s numbers.

1. How old and how healthy were the most recent applicants?
Perhaps the first thing insurers want to know about the most recent crop of Obamacare applicants is their age and health status. Previous concerns over a “death spiral” prompted the administration to do some hasty commercial outreach to the so-called “young invinceables” to bolster the pool with less risky policyholders.

Fortunately, there is some good news on this front.

While no numbers are exact, insurance analysts say early indications suggest many of March’s enrollees were young minorities.

“The enrollment surge is the best news possible for insurance companies,” Larry Levitt, senior vice president at the Kaiser Family Foundation told Bloomberg.

Without exact numbers, it will be difficult for insurers to calculate 2015 rates, which—in some cases—are due this month. If the indications prove to be correct, however, the last-minute enrollees may have a moderating effect on future insurance rates.

2. How many of the applicants are newly insured versus those who lost their plans?
When Cleveland, Ohio producer Ingrid Martin heard the enrollment announcement, her first question was how many of those 7.04 million applicants were newly insured.

“I found myself screaming at my TV because there’s no way all 7 million are new to insurance,” Martin said. “The majority probably had coverage and lost it.  I have plenty of clients who lost their coverage because of the Obamacare rules, so they’re not newly insured.”

While there’s no telling how many of the 7.04 million applicants had to reapply for coverage, estimates place the number of Americans whose plans were discontinued because they were deemed “sub-standard” at roughly 5 million to 6 million.

If the same number signed up for insurance through the public exchanges, the ground gained by health reform is more marginal than it seems currently.

3. How many applicants have paid their premium?
As Washington Post columnist Marc Thiessen noted, enrolling without paying your premium is “like putting merchandise in your Amazon cart but never clicking ‘buy.’”

The reason it’s so important to know whether applicants have paid their premiums—apart from the obvious financial reasons—is because it may indicate how many applicants are likely to actually stick with their plan.

A new analysis from U.C. Berkeley Labor Center estimated that roughly 40% of those who applied through the state’s exchange, Covered California, are expected to leave their health insurance plan. About 20% are expected to find insurance through a new job, and another 20% will see their incomes fall and become eligible for Medi-Cal—the state’s insurance program for low-income residents.

This churning could become an issue when insurers attempt to calculate rates in coming years.