Saturday, November 16, 2013

How Disastrous is Obamacare, Part II

All right, amid all the claims that Obamacare is toast, let us look at figures released for the first month by the Department of Health and Human Services (HHS) to see just what is going on.  For starters, it is actually somewhat more than a month.  The dates are not October 1 through 31, but October 1 through November 2.  But then again, the system was essentially non-functional the first few days, so maybe adding those extra two may be treated as compensation.  It is also important to remember the goal.  The goal most frequently cited is to enroll 7 million people by the end of March.  But the actual goal is to enroll 7 million people in private insurance by the end of March, with 9 million in Medicaid.  So the total goal is to enroll 16 million people.  Likewise, the figure getting the most attention is that only 106,185 people have actually signed up for private insurance, far short of the goal of 500,000 for the first month.  The again, the total enrolled is about that many counting the number enrolled in Medicaid. But I have not seen the enrollment goals for Medicaid, and how the actual number matches up.

So, to repeat, there are three stages to enrollment.  The first is to create an account.  The government report does not include a statistic on the number of accounts created, and probably just as well.  Many people created accounts out of curiosity, or browse for prices, and others had to create new accounts when the old ones failed.  Creating an account does not, by itself, show an actual commitment to buy insurance.

The next stage is to submit an application for financial assistance.  The total number of applications submitted was 846,184.  Since many of these were for families with more than one member, the number of individuals represented is 1,508,883.  The report boasts that this is 22% of the goal of 7 million people enrolled, but this needs to be severely qualified.  If one counts the goal of enrolling 9 million in Medicaid, it is closer to 9.4%. Even if we round up to 10%, clearly we need to step this up if anything close to the goal is to be achieved. Furthermore, the report does not address how many of the applications are duplicates.  Many failed applications have had to start a new account with a new e-mail.  HHS has apparently sent out 275,000 e-mails asking customers to re-apply.  So the total of actual applications might be closer to 571,000, representing an undetermined number of people.  Nonetheless, lacking anything better to go by, I will assume that all these applications and the people they represent are the correct number.

I wondered whether the government was successfully processing all these applications, and the answer appears to be yes.  Approximately 98%, or 1,477,853 people have been processed.  (We are not told how long the typical processing time is).  Of these 1,081,592 (73%) have been steered to private plans and 396,261 (27%) to Medicaid or S-CHIP. The assumption appears to be that anyone found eligible for those two programs has actually been enrolled. Of the 1,081,592 people eligible for private insurance, only a distinct minority, or 326,130 have been found to be eligible for financial assistance.  That is about 30% of the people sent to private enrollment, and 22% of total applicants.

And now for the figure we have been hearing most about.  Out of the people referred to private insurance, only 106,185, or less than 10% have actually signed up for insurance.  Of these, 79,391 signed up on state exchanges and only 26,794 on the federal exchanges.  As HHS comments, this is about 1.5% of the goal of 7 million.  Meanwhile, although HHS has not said so, the signups for Medicaid and S-CHIP are about 4.4% of the goal.  HHS defends these numbers as not so different that the percentages at similar stages in Romneycare, S-CHIP, and Medicare D.  Romneycare and Medicare D, at least, also had plenty of technical problems at the beginning.  What I am not clear on is to what extent those problems were responsible for slow initial sign-ups in those programs.

There are two reasons why sign-up might be faster for Medicaid/S-CHIP than private insurance.  One is that there are no choices to be made for Medicaid/S-CHIP; one simply signs up and that is all.  The other is the technical problems in connecting to insurance companies to sign up.  The best way to guess to what extent each factor is responsible is to compare the federal exchanges, which are having major technical problems linking to private insurance, with state exchanges, which are working much better.  I do not have any numbers for relative population of people in states running their own exchanges versus states using the federal exchange.  Of 846,184 applications, 61% were from federal exchanges and 39% from state exchanges.  People represented skew a little more toward the federal exchanges, at 66% versus 34%. People actually processed  break down similarly to applications submitted, at 60% federal versus 40% state.  But things change considerably when we get to people signed up.  Out of 396,261 people determined to be eligible for Medicaid/S-CHIP, 212,865, or about 54% of the total were from state with their own exchanges, versus 46% from federal exchanges.  Another way of looking at these applications is that about 36% of all applicants processed were determined to be eligible for Medicaid/S-CHIP on state exchanges, versus 18.5% in federal exchanges.  This may be because many of the states using federal exchanges declined the Medicaid expansion.  But the most spectacular difference is in people eligible for private insurance signed up in federal versus state exchanges.  The 79,381 people signed up for private insurance on state exchanges are 20.9% of those eligible.  The 26,794 eligible in federal exchanges represent a mere 3.8% of those eligible. This difference is presumably the result of defective connections with private insurance companies.*  If the connection worked properly, the federal number would presumably be closer to 146,847 (20.9% of 702,619 people eligible).  In that case, the total number of people signed up for private insurance would be 226,228.  That would be somewhat less than half the goal for this month, and about 3.2% of the goal of 7 million -- behind Medicaid/S-CHIP, but not that far behind.

My ultimate conclusion -- not great, but not as disastrous as conventional wisdom has it. It should be salvageable -- but only if the federal exchange is fixed.

*If there has been double-counting of some applications on the federal exchanges, this could account for some of the discrepancy as well.

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