Contra White House, Obamacare Exchanges Enroll Roughly 5 Million Uninsured, Not 11.4 Million

 Avik Roy , Forbes Staff

Last night, the White House tweeted that “about 11.4 million Americans are signed up for private health coverage” through Obamacare’s insurance exchanges. President Obama claims that this figure proves that his health law is working. But once you unravel the spin, what the latest numbers show is that the pace of enrollment in Obamacare’s exchanges has slowed down by more than half. If previous trends hold,  Obamacare exchanges have enrolled roughly 5 million previously uninsured individuals: a far cry from 11.4 million.

RT the news: About 11.4 million people are ✍ up for private health coverage through the#ACA. #11MillionAndCounting pic.twitter.com/E7eiiI0oZe

— The White House (@WhiteHouse) February 17, 2015

Only 84% of ‘signups’ enroll in coverage

As you may remember from our coverage of this issue last year, there are two important ways in which President Obama’s claims about Obamacare enrollment diverge from the facts. The first is that “signups” don’t equal enrollment.

In order to actually gain health insurance coverage—that is, a health insurer will pay for your health care claims when you go to the doctor—you have to pay the first month’s premiums.

Not everyone does. Last year, the Obama administration reported that about 8 million people signed up by “selecting a marketplace plan” on one of the Obamacare exchanges. By the end of the enrollment year, 6.7 million people were actually enrolled in Obamacare-sponsored private insurance plans: a retention rate of 84%.

The Case Against Obamacare: An eBook From Forbes 
Don’t be fooled. The new health law has disrupted coverage for millions, and driven up costs for millions more.

That Obamacare lost some people over the course of the year isn’t anything to fret about. That 84% retention rate is fairly similar to that experienced by private insurers in the conventional, employer-sponsored private insurance market. But still, you didn’t hear the White House trumpet the 6.7 million number as loudly as they had the 8 million one.

Applying the same retention rate to the new 11.4 million figure leads to an estimate that Year Two of Obamacare will end up with 9.5 million enrollees: an increase of 2.8 million from the previous year.

How many enrollees were previously uninsured?

The next question is even more important: how many people enrolling in Obamacare were previously insured? If you go by White House press releases and the related coverage from friendly media outlets, you might think that every one of those enrollees was previously uninsured, and had been saved by Obamacare. Not true.

We don’t know the actual number of Obamacare exchange enrollees who were previously uninsured, because the Obama administration hasn’t tracked those statistics. But we do know that at least 4.7 million Americans received cancellation notices in 2013, because Obamacare’s regulations made their health plans illegal. Based on survey data from McKinsey, last May I estimated that 2.6 million previously uninsured individuals gained private non-group coverage. A survey by the Kaiser Family Foundation found that 57% of those with exchange-based coverage were previously uninsured, which would amount to 3.8 million in 2014.

We also can’t predict whether or not the uninsured fraction will be higher in 2015 than it was in 2014. But if we carry forward the more generous Kaiser estimate of 57%, and combine it with the 84% retention rate, we can estimate that about 5.4 million previously uninsured individuals would be enrolled in Obamacare’s exchanges by the end of the 2015 enrollment period, based on current figures.

Needless to say, 5.4 million is not as impressive as 11.4 million. And it means that  the White House is being deceptive when it claims that there are 11.4 million sign-ups “thanks to the Affordable Care Act.”

Why did the pace of enrollment slow down by 58%?

Whether you go by signups or true enrollment, the pace of enrollment in Obamacare’s exchanges has slowed down considerably. In the 2014 enrollment year, the administration reported 6.7 million enrollees. We don’t know exactly where 2015 will end up, because the administration is extending the open enrollment period in various circumstances, but the net gain in enrollees will end up somewhere around 3 million.

Why did enrollment slow down so much in Year Two? A few reasons.

First, Obamacare’s exchange-based plans are really expensive, even if you partially benefit from the law’s subsidies. In a 3,137-county study we published last year, I and two Manhattan Institute colleagues found that underlying premiums had increased by 49% in the average county for people shopping on Obamacare’s exchanges. (You can visit our interactive map and find out how your county stacks up.)

Second, a lot of people who signed up in Year One didn’t stick around during Year Two. For some, this could be a result of changing economic circumstances: for example, a new job with employer-sponsored health insurance. For many others, however, it’s a result of dissatisfaction with the value and quality of Obamacare-based coverage.

Basically, the main people signing up for Obamacare exchange coverage are the ones who most heavily benefit from the law’s complex subsidy scheme: those with incomes near the poverty line, those with expensive diseases, and those nearing retirement. Most others are staying uninsured.

CBO rolls back its estimate of uninsured exchange enrollees

In 2010, the Congressional Budget Office estimated that in 2015, there would be 13 million people enrolled in Obamacare’s exchanges, with the vast majority coming from the ranks of the uninsured. (The CBO estimated that there would be two million fewer people with conventional private coverage, for an approximate net increase of 11 million, though this is a simplistic calculation with several asterisks.)

Last month, however, the CBO’s latest projections estimate that there will be 12 million people enrolled in the exchanges, with a significantly smaller fraction deriving from the uninsured. (This time, the CBO estimated that there would be 5 million fewer people with employer-sponsored coverage, for an approximate net increase of 7 million.)

Another way to look at the CBO estimates: in 2010, the CBO predicted that the exchanges would gain 5 million enrollees in 2015 vs. the previous year; last month, the CBO predicted gains of 6 million. The actual number? 3 million.

The U.S. Department of Health and Human Services went out of its way todispute the CBO’s estimates, setting an expectation of between 9 and 11.5 million enrollees for 2015. They’ll beat the low end of that lowered range—which is what it was designed to do—but it isn’t that impressive.

Obamacare remains ripe for major revisions

If the Supreme Court decides King v. Burwell in favor of the challengers, as it should, then Republicans will have a unique and historic opportunity to make major changes to the law. They ought to pass a bill making Obamacare’s tax credits available to interested states, shorn of the individual mandate and the various insurance regulations that are driving up the cost of individually-purchased health coverage. I’ve outlined one way to do this; there are others.

For all of the disruption that Obamacare has caused, it’s worth noting how few people the law has helped. As New York Sen. Chuck Schumer (D.) put it last fall, “it wasn’t the change we were hired to make.”

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UPDATE: Peter Suderman notes that the 11.4 million news release “follows a familiar pattern” from this administration. “When the news looks good, it comes out quickly and is said to exceed expectations. Thus when it fails to come out, one suspects it does not look quite so good.”

It is in some ways remarkable that the White House can provide this information so quickly. Not because the information should be hard to collect, but because other similar information often eludes the administration.

As Bloomberg News health care reporter Alex Wayne noted on Twitter earlier today during a Q&A session with Health and Human Services Secretary Sylvia Matthews Burwell, the administration “still can’t tell us how many people were enrolled in Obamacare at the end of 2014.”

 http://www.forbes.com/sites/theapothecary/2015/02/18/signup-slowdown-obamacare-exchanges-will-gain-only-3-million-enrollees-in-2015/?utm_campaign=yahootix&partner=yahootix