13 December 2013
MORE than two months after Barack Obama’s health exchanges opened, they seem to be working, up to a point. On December 11th health officials announced that nearly 365,000 people chose an insurance plan through the exchanges in October and November. That is a big improvement. In October 106,185 people selected a health plan, with just 26,794 signing up through the troubled federal exchange. The new numbers are a two-month tally, apparently to avoid double-counting. In October and November 364,682 people chose an insurance plan, with 137,204 signing up on the federal exchange.
Enrolment will probably surge this month. Officials toiled to patch up Healthcare.gov, the shopping website for 36 states, by December 1st. Consumers must buy insurance by December 23rd if they want to be covered in January.
Several crucial numbers remain under wraps, however. The report does not say how many enrollees are young, which matters because Obamacare relies on young healthy people to subsidise the sick. The report also explains how many people have chosen a plan, but does not describe how many enrolment forms have been successfully sent to insurers. Without this step, it is unclear how many of the 364,682 people who have chosen a plan will actually have coverage.
But the figures do reveal two interesting trends. First, just 41% of the 2.3m people deemed eligible for insurance on the exchanges also qualify for subsidies. The Congressional Budget Office had expected subsidised shoppers to comprise 86% of enrollees on the exchanges in the first year.
Second, 1.9m of the 2.3m eligible shoppers have yet to pick a plan. Many have doubtless been stymied by software glitches. Others may not like the insurance on offer, or may be undecided. Many health plans sold on the exchanges come with high co-payments and deductibles (the money a patient must spend before his insurance kicks in). Most also offer only a narrow choice of doctors and hospitals.
Obamacare’s design all but guaranteed this. Insurers must comply with numerous rules. For example, plans must cover a list of “essential health benefits” and must not charge more to sick patients. They must also have a set “actuarial value” of bronze (which means that the insurance covers 60% of an average patient’s health costs), silver (70%), gold (80%) or platinum (90%).
These standards make it easier to compare plans. But they also give insurers little room to differentiate their products. To compete on sticker price, they can lower costs by restricting patients’ choices of clinics. They can also compete by varying deductibles and co-payments.
High deductibles have some merits. The young and fit expect to incur few medical costs, so they are more likely to sign up for insurance if premiums are low (which typically means that deductibles are high). Poor, sick Americans, however, may find that high deductibles hurt. Obamacare limits out-of-pocket spending, but a chronically ill man earning $23,000 will have to pay $5,200 in cash before reaching the cap, according to Avalere Health, a consultancy. One day, this may prompt Democrats to rethink the rules for the exchanges. For now, they must hope that the young sign up.