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Federal officials expect just modest Obamacare growth in '16

An agent from Sunshine Life and Health Advisors offers insight to potential enrollees in Miami about the plans available last year under the Affordable Care Act.
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An agent from Sunshine Life and Health Advisors offers insight to potential enrollees in Miami about the plans available last year under the Affordable Care Act.

It looks like Obamacare enrollment is hitting a wall.

Federal officials Thursday said they expect the number of people who sign up for Obamacare plans to grow just modestly in 2016 — by fewer than 1 million people — compared with this year. That rate would leave enrollment well below what the Congressional Budget Office had most recently estimated for the third year of sign-ups under the Affordable Care Act.

Officials, in explaining their projection, cited a smaller pool of uninsured people on which to draw, as well as the difficulty in overcoming those people's strong concerns about being able to afford health coverage, and their confusion about how federal tax credits can help them buy such plans.

By the end of 2016, an estimated 10 million will have been enrolled in health coverage in plans sold on government-run insurance exchanges, said Health and Human Services Secretary Sylvia Burwell, who based that goal on an analysis by her department.

That's only about 10 percent more than the 9.1 million people that HHS expects will be enrolled in the plans by the end of this year, despite the fact that the tax penalty for failing to have health coverage is set to rise significantly in 2016.

The figure is also 11 million people lower than the 21 million customers that the CBO had predicted for 2016 enrollment on the exchanges as recently as last January. CBO has estimated that 12 million people will be enrolled this year, well above the actual figure.

Richard Frank, assistant secretary for planning and evaluation at HHS, said that one reason that CBO's projections have been higher than HHS's estimates is that CBO has assumed a much larger shift of people to the Obamacare exchanges from either job-based health plans or individual plans sold outside of the exchanges. Frank said HHS has not seen that expected shift.

As of June, about 10.2 million paying customers were in plans sold either through the federal exchange HealthCare.gov, or from a state-run insurance marketplaces. But officials have said that number is expected to drift down to 9.1 million by the end of this year as some of those people get coverage elsewhere, or drop their plans for other reasons.

More than 80 percent of exchange enrollees, by virtue of their low or moderate incomes, get subsidies that lower the cost of their monthly premiums.

The new projection comes just two weeks before open enrollment in Obamacare plans is due to being Nov. 1, and after a sharp, two-year drop in the number of uninsured Americans since full-scale implementation of the Affordable Care Act began.

The federal Centers for Disease Control in August said that the uninsured rate was 9.2 percent, down from about 15 percent in 2013, the year in which the Obamacare exchanges began selling coverage. Enrollment of the previously uninsured on the exchanges has been credited with decreasing that rate, as has the expansion of Medicaid benefits, which has led to millions of new sign-ups in that government program for the poor.

But the latest projections for 2016 exchange enrollment underscore what Obamacare analysts have been saying for some time: The first year of open enrollment in the new insurance plans in 2014 captured the "low-hanging fruit" of the uninsured and people interested in obtaining better levels of coverage than they had. Analysts have also said that significantly increasing the numbers of newly insured on the exchanges would prove more difficult in future years.

Burwell said about 10.5 million uninsured people are eligible to sign up for enrollment on Obamacare exchanges. She expects that 1 in 4 of those currently uninsured people to sign up for 2016 coverage, and said that getting more than that rate would be difficult.

"We're starting this year with significantly fewer" eligible people, she said. "And they're a little harder to reach."

"We're going to work hard to reach them."

Still, Burwell tried to cast the new projection in a positive light.

"We believe 10 million is a strong and realistic goal," Burwell said. "We've see high levels of satisfaction with the marketplace, and expect that the vast majority of our current customers will re-enroll."

She also said "we're targeting our outreach and our messaging to make sure we get peoplethe information they need to make the right decision for their families."

"For instance, we're going to be talking a lot about financial assistance, since we know costs are on our customers' minds," Burwell said. "Starting November 1, our targeted outreach campaign will reach Americans where they live, work and play to inform them of the opportunity to enroll or re-enroll in coverage."

HHS also will be highlighting the tax penalty that people face if they fail to have some form of health coverage during the year. In 2016, that penalty rises to the greater of $695 per adult or 2.5 percent of household income. For 2015, the penalty is the from the greater of $325 per adult or 2 percent of household income.

HHS is projecting that between 11 million and 14.1 million people will actually select plans sold on Obamacare exchanges during the coming open enrollment period. But some of those people will not make their first month's premium payments, and others who get officially enrolled will end up leaving their plans during the course of the year.

Officials project that after attrition, 10 million paying customers will be in exchange plans by the end of 2016.

Frank, the assistant secretary for planning and evaluation, said that Obamacare enrollment is not plateauing, but instead is taking longer to reach a state of "equilibrium" in which the level of enrolled people and uninsured people will remain fairly static.

"We're going to be getting between 25 and 30 percent of the uninsured" next year, Frank said. "That's fairly big growth."

"We're not seeing evidence of having plateaued," he said. "We're seeing a much longer path to reach the long-term equilibrium for that market."

Obamacare expert Larry Levitt, senior vice president of the Kaiser Family Foundation, said, "One would expect the administration to set a bar that they're sure they can reach. That's just smart politics."

"Underlying this projection is the reality that the remaining uninsured are getting harder to reach, so it's going to very tough to increase enrollment substantially," Levitt said. "At some point, low enrollment growth may trigger a discussion about how much the ACA is doing to reduce the number of people uninsured, and whether the subsidies in the law are sufficient to make coverage affordable."

He added, "A big wildcard for 2016 is the fact that the individual mandate's penalties ramp up significantly. This is uncharted territory and no one really knows for sure how people will react."