News / Health

Obamacare May Get Sick if Young Americans Don't Sign Up

FILE - Jaime Corona, patient care coordinator at AltaMed, speaks to a woman during a community outreach on Obamacare in Los Angeles, California.
FILE - Jaime Corona, patient care coordinator at AltaMed, speaks to a woman during a community outreach on Obamacare in Los Angeles, California.
Reuters
Now that more than 2 million people have signed up for private insurance plans created by President Barack Obama's healthcare law, a crucial next check-up for the new marketplace will be to see how old customers are.
 
Early data from a handful of state exchanges shows the administration needs more young adults to sign up in the next three months to help offset costs from older enrollees and prevent insurers from raising their rates.
 
Critics of Obama's Affordable Care Act say the market won't attract enough young people to keep it financially viable, putting more pressure on government funds to compensate for any insurer losses.
 
Data from seven states and the District of Columbia, which are running their own marketplaces, show that of more than 200,000 enrollees, nearly 22 percent are 18 to 34 years old, according to a Reuters analysis.
 
The administration had hoped that over 38 percent, or 2.7 million, of all enrollees in 2014 would be 18 to 35 years old, based on a Congressional Budget Office estimate that 7 million people would sign up by the end of March.
 
“The whole insurance relationship is counting on them signing up,” said Dale Yamamoto, an independent healthcare actuarial consultant. “Otherwise rates will have to increase.”
 
The picture from the initial state data is likely to change, since it mostly includes people who enrolled only through November, before a year-end surge of sign-ups for people wanting coverage effective Jan 1. Many experts speculate the early enrollees were more likely to be in urgent need of coverage, and therefore more likely to be older or sicker.
 
A recent survey by The Commonwealth Fund, a healthcare research foundation, found that 41 percent of those who had shopped at the various state marketplaces by the end of December were ages 19 to 34, up from 32 percent from an October survey.
 
One marketplace with current data, the District of Columbia, said on Friday that of the 3,646 enrollees in private plans through Thursday, about 44 percent are young adults.
 
Healthcare experts say many young healthy people may sign up only at the end of enrollment on March 31 to avoid paying the law's penalty for not having health insurance.
 
A factor of price
 
The Affordable Care Act, popularly known as Obamacare, prevents insurers from charging people more if they have a health problem. Age is one of the few factors that can affect the price, with insurers allowed to charge up to three times more for a 64-year-old than someone in their early 20s.
 
But the healthcare costs for a 64-year-old on average are nearly five times as much as a 21-year-old, according to a study of claims from three large insurers Yamamoto conducted for the Society of Actuaries.
 
“The more that the marketplace is able to attract a broad mix of enrollees including the young and healthy ... the more that costs will be sustainable and premiums will be more affordable,” said Robert Zirkelbach, spokesman for America's Health Insurance plans, a trade group for insurers.
 
Other factors may be as crucial, if not more, in determining the stability of the new market, including the health status of enrollees, regardless of their age, and how that lines up with what individual insurers had projected. But those details will only become clearer later in the year based on the medical claims filed by the newly insured, making age the best early proxy about whether the market is sustainable.
 
The Centers for Medicare and Medicaid Services, which oversees the marketplace for 36 states, has yet to provide any demographic data about enrollees. CMS is expected to release an enrollment report later this month.
 
Data may come sooner from insurers as they discuss their recent financial performance with investors in the next few weeks. Humana Inc said on Thursday that the mix of enrollment in its marketplace plans were likely to be “more adverse than previously expected.”
 
But healthcare experts say insurers need a better mix of enrollees than seen in the early data.
 
“If a quarter or more of the enrollees are young adults, I would think that's an encouraging sign, particularly for the first half of the open enrollment period,” said Larry Levitt, senior vice president at the Kaiser Family Foundation healthcare think-tank.
 
By the end of March, “if it's lower than that, I think there would be some cause for concern,” Levitt said.
 
Levitt and colleagues at Kaiser analyzed a scenario that they deemed “worst case” in which young adults represented 25 percent of enrollees. They found that costs then would be about 2.4 percent higher, but insurers would retain a very slim profit margin. As a result, the Kaiser authors projected the companies would raise premiums by a commensurate amount, but not enough to destabilize the market.
 
Using the same data as Kaiser but different assumptions, Seth Chandler, a law professor at the University of Houston who specializes in insurance, said costs would be 3.5 percent higher, should only 25 percent of enrollees be young adults.
 
“If we see fewer than 30 percent of the enrollees being in that 18-to-34 age bracket, that's a warning sign that there are problems,” Chandler said. “If the demographics come in poorly, insurers are going to lose money.”
 
Chandler is a skeptic of the healthcare law and writes a blog called “ACA Death Spiral.” Such a spiral is thought to occur if insurers facing higher costs raise premiums, so only very sick people buy coverage, leading to even higher premiums with the pattern continuing until the insurance market either disappears or shrinks to the point that it is not sustainable.
 
The penalty for not buying insurance increases significantly by 2016, which should bring in more young and healthy holdouts over time.
 
Not everyone, however, is significantly concerned about the age of Obamacare enrollees this year.
 
Linda Blumberg, senior fellow at the Urban Institute's Health Policy Center, said that Obamacare's protections for insurers in the first few years means the program has time to get the demographics sorted out.
 
“That all combines to make me much less worried about the mix for this year,” Blumberg said. “I don't think we have to get a certain percentage of enrollees to be below age 35 or this thing crumbles.”

You May Like

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid