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Obamacare exchanges lag behind projections, could use private sector help

A woman sits with an insurance agent to pick an insurance health plan under the Affordable Care Act.
Getty Images
A woman sits with an insurance agent to pick an insurance health plan under the Affordable Care Act.

Obamacare exchanges ain't broken, but they still may need some fixin'.

A new report strongly criticizes the government-run markets that sell health insurance as falling well short of projected and potential enrollment levels, and calls for a set of private sector-based improvements to boost business for the existing Obamacare model.

"The Affordable Care Act isn't living up to expectations and its potential," said Joel White, president of the Council for Affordable Health Coverage, which produced Tuesday's report.

"The exchanges aren't adequately meeting the needs of enrollees and the taxpayers," said White, whose group is a coalition of insurers, employers, patients, pharmaceutical manufacturers and health providers.

White's group proposes a "Next Generation Exchange" model that would encourage more competition by private insurance shopping websites with the government exchanges, including HealthCare.gov, the federally run Obamacare market that serves most of the United States.

It also calls for allowing a "PayPal-like portability" of the subsidies that most Obamacare exchange customers receive so they can be easily tapped to help reduce premiums for plans sold on private marketplaces.

White said the group has been in discussion with a number of Congressional offices about getting a bill drafted and introduced this year that would implement the recommended changes.

The council's report noted that the Congressional Budget Office in March 2010 estimated that 21 million people would be enrolled by 2016 though the Obamacare exchanges, also known as marketplaces, that offer plans issued by private insurers. The CBO has since revised that estimate downward several times, most recently to 12 million enrollees.

But the Obama administration estimates that by the end of this year only about 10 million or so people will be enrolled.

Thursday's report pointed out that attrition on the exchanges approaches 20 percent, meaning that about 1 out of every 5 of the 12.7 million people who bought Obamacare plans during the most recent open enrollment will drop out by year's end, often by either failing to pay their first premiums or just cancelling their plans.

The report also noted that the population of exchange customers "is disproportionately older and lower-income, as compared to the potential exchange population."

While 81 percent of the eligible population that earns between 100 percent and 150 percent of the federal poverty is enrolled on the exchanges, the percentage drops off dramatically the higher the income levels rise. Just 2 percent of the potential exchange customers who earn 400 percent of poverty level are enrolled.

Males and Hispanics are enrolled at significantly lower rates than their potential, the report said. Just 23 percent of the eligible Hispanic population in 2013 was enrolled in an Obamacare exchange plan. Among men, just 46 percent of those eligible for an exchange plan as of 2013 were enrolled by this year.

"We think that health-care reform is a great idea," but that idea has been badly executed in the United States, said Jeff Smedsrud, CEO of the privately run health-care shopping comparison search engine HealthCare.com.

"Health care right now, and the exchanges, it costs too much, it comforts too little, it confuses too many, and as a result it covers too few," said Smedsrud, whose group belongs to the Council for Affordable Health Coverage, and who participated in a press call about the report.

The council's report comes as proposed Obamacare premium prices for 2017 are being rolled out. Those premiums are expected to spike by higher rates than in past years, which has led to concerns that enrollment will not grow by much.

A spokesman for the U.S. Health and Human Services Department, which oversees Obamacare, had no comment on Tuesday's report.

However, the Obama administration has repeatedly touted its success in reducing the number of uninsured Americans by 20 million since the ACA's implementation. Those newly insured people received coverage from the exchanges, as well as from Medicaid programs in states that agreed to expand eligibility under the law.

As a result, the nation's uninsured rate has hit record lows in recent years. As of now, 9 in 10 Americans have some form of health insurance.