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Obamacare enrollment at 11.1M, as some drop off after premium bills come due

A person enrolls in a health insurance plan under the Affordable Care Act.
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A person enrolls in a health insurance plan under the Affordable Care Act.

Is this a ceiling or a launch pad?

Federal health officials in a new report say that about 11.1 million people were enrolled in Obamacare insurance plans as of the end of March.

That's 1.6 million or so fewer people than had actually selected a plan on one of the government-run health marketplaces by the close of the third season of open enrollment in February.

The drift-down, which was expected, is largely a result some people who had selected a plan not making their first month's premium payments once they came due. For enrollment to be considered official that payment has to be made.

In 2014, Obamacare's first enrollment season, 8 million people selected plans but only 7.3 million people ended up being enrolled by mid-year. Last year, 11.7 million signed up, but 10.2 million people actually ended up paying.

Health officials noted in a report on the new tally that "almost a million more" people are enrolled this year compared to last year.

"This increased level of enrollment demonstrates the strength of the marketplace over time, as millions of Americans continue to have access to quality and affordable coverage when they need it," said Kevin Counihan, CEO of HealthCare.gov, the federally run Obamacare marketplace that serves residents of 38 states.

Counihan's exchange had 8.4 million paying customers, according to the new enrollment report. The remaining 2.7 million came from the state-based marketplaces.

Florida had biggest Obamacare enrollment tally of any state, with 1.53 million customers who enrolled via HealthCare.gov. California's state-run exchange has 1.4 million customers, and another 1.09 million people in Texas are enrolled through the federal marketplace.

Counihan said the exchange-sold plans are "an important contributor to that progress," which has led to "20 million Americans [to gain health] coverage thanks to provisions of the Affordable Care Act." Those provisions include the expansion of Medicaid eligibility rules in 31 states, and allowing of adults under age 26 to be covered by their parent's health plans.

But after big gains in enrollment in individual insurance plans in Obamacare's first two seasons, the new, slightly higher tally raises the question about how much potential there is for significant growth in enrollment via the exchanges in coming years.

Enrollment in Obamacare plans stood at 9.1 million at the end of 2015, as some people moved into different forms of coverage or dropped their plans for other reasons.

The Health and Human Services Department said Thursday that it continues to project that by the end of this year, enrollment likewise will continue to drift down from the current level of 11.1 million people to 10 million.

"The Obamacare exchange business has clearly hit a ceiling," said Robert Laszewski, an Obamacare critic who runs Health Policy and Strategy Associates.

Laszewski cited the new tally, as well as information he is getting from insurance carriers, that suggests the exchange-sold health plans have hit a ceiling.

"The [insurance] carriers tell me they have a lapse rate of about 2 percent per month," Laszewski said. "A 2 percent per month lapse rate for the remaining 9 months on 11.1 million now would take us to 9.1 million—right where they finished last year," he said.

Enrollment in coming years could be grown significantly, "but only if the health plans that are offered can be made more attractive," Laszewski said.

"Only about 40 percent of the eligible have so far signed up and the take-up rate is far worse the higher the incomes are," he said. "There are obviously problems in the attractiveness of the plans for those making more than 200 percent of the poverty level, the healthy, and the younger. Obamacare will not grow past this unsustainable point until changes are made to attract these people."

Another concern for Obamacare advocates come from premium prices proposed for 2017. Many plans are calling for double-digit percentage hikes next year, higher than had been proposed in prior years. The 2017 plans go on sale Nov. 1.

Health officials, however, have repeatedly highlighted the affordability of the plans to many people. The new tally report revealed how many people are getting financial assistance with their Obamacare insurance.

Nearly 85 percent, or 9.4 million of all Obamacare customers, received federal subsidies, or tax credits, to help lower the cost of their monthly premiums. Those subsidies are available to people who have low or moderate household incomes earning between one and four times the federal poverty level, or $20,090 to $80,360 for a family of three.

Premium subsidies can significantly reduce the actual premiums paid by a customer, particularly if they have lower incomes. The average subsidy nationally was $291 per month.

Counihan, during the last open enrollment, repeatedly pointed out that most customers on the exchanges would be able to find a plan costing them $100 or less in monthly premiums after the subsidies are factored in.

Another 57 percent or so of all customers nationally additionally receive subsidies to lower the amount of out-of-pocket health costs they are personally charged when receiving medical services or medications, according to the new report. Those so-called cost-sharing reductions are available to people whose household incomes are below 250 percent of the poverty level, or $50,225 for a family of three, and who sign up for "silver" Obamacare plans.

Silver plans, which cover the costs of about 70 percent of health services, are by far the most popular Obamacare plans, with 7.72 million people customers this year, or nearly 70 percent of all plan selections.

But the value of cost-sharing subsidies drops off the higher one's income. That is one factor that Laszewski and others have cited when they note that enrollment in Obamacare plans is relatively low among higher-income groups.

A report by the Avalere Health consultancy shows that 81 percent of the potential Obamacare exchange customers who earned between 1 and 1.5 times the poverty level selected a health plan during the most recent open enrollment.

But only 45 percent of the potential customers earning between 151 percent and 200 percent of poverty signed up. And only about a third of the potential exchange customers earning between 201 and 250 percent of poverty signed up.

Just 2 percent of the potential exchange enrollees who earn above 400 percent of poverty — the limit for receiving premium subsidies — selected a plan. People who earn more than 400 percent of poverty pay full price for the monthly premiums, and would be most affected by the price hikes proposed for next year.

Also susceptible to those price increases are people who purchase individual health plans outside of the Obamacare marketplaces. Subsidies are available only to eligible customers on those marketplaces.