A guide to being appropriately neurotic about exchange glitches and enrollment

First-week glitches were easy to brush off. Now that we’re rounding into the third week, the glitch narrative is turning toward back-end (insurer) problems that make initial “we didn’t build for this kind of traffic” issues look rather cosmetic.

Haziness about enrollment-to-date further complicates just how concerned we should be by the exchanges. HHS has said that they won’t release enrollment data for the federally-faciliated marketplaces (the ones run through healthcare.gov) until sometime in November. States are offering up information a bit more quickly; you can check with the Advisory Board for regularly updated estimates.

So, how do we judge the situation? I’m no coding guru, so I can’t comment on how big the technical obstacles actually are, but there are important contextual details to keep in mind. Like these:

What day is it today? There’s a sequence of dates important to the full rollout of the exchanges. For all of the bad news we’ve heard, it’s still only October—early enough that I haven’t settled on a Halloween costume yet. Here are the dates that matter:

  • October 1: The exchanges went live, though this was an arbitrary pick by the administration, not a legal deadline.
  • January 1: Insurers need to be ready to initiate coverage for anyone who enrolled before December 15. This means that back-end problems with registration and payment need to be sorted out, or beneficiaries might run into problems when they seek care.
  • February 15: People need to enroll in plans by mid-February to avoid the mandate penalty. Key caveat: the penalty is pro-rated for the time a person spends uninsured, so people who sign up a few weeks late won’t incur the full cost of the annual penalty. Plus, that penalty is very low in the first year, the greater of $95 or 1% of income. It also doesn’t apply to those who qualify for a hardship exemption.
  • March 31: The open enrollment window is scheduled to close at the end of March, but this is another thing that could be targeted for change if the bugs aren’t ironed out soon.

“7 million” is a CBO enrollment projection, not a critical threshold. You’ll hear that the administration has a marketplace enrollment goal of 7 million people, and that’s true. It’s also wholly lifted from a CBO projection; it’s not a floor for financial viability of the exchanges. If that sort of critical threshold exists, I haven’t seen it— and it wouldn’t be designated at the national level, anyway. The Associated Press obtained a September 5 memo from HHS that details state-level enrollment goals for October, but they’re also patterned on CBO’s projections.

Exchange success will play out at the state and insurer level. Far more important than aggregate national enrollment is state- and plan-level data. We worry about enrollment because we worry about risk pooling: will there be enough healthy individuals to balance out the sicker and more expensive patients? That happens at the level of independent insurers, though reinsurance will buffer unexpected adverse selection in early years.

Beyond technical difficulties, marketplace success is likely to vary across states because of political and cultural forces beyond the administration’s reach. Hypothetically, national enrollment could wildly exceed CBO’s expectations—but if that enrollment is concentrated in states receptive to Obamacare, intransigent states might continue to face hurdles.

The number you’re jumping to conclusions about: is it marketplace accounts, applications, or actual enrollment? The number of accounts created is a useless metric—we don’t know how many of those are just curious observers. The number of people who “applied” is still nebulous; the premium still needs to be paid and processed. Even “enrolled” numbers need to be weighed carefully: processed applications could represent families, not just individuals. When you see that exchanges have enrolled “at least” a certain number of individuals, that’s the variable tripping up their estimates.

Age and health status matter. Balanced risk pooling is way more important to exchanges’ viability than total enrollment. As more detailed data becomes available, you’ll see people picking apart demographics. The White House has said that they aim to enroll 2.7 million young adults in the first year, again, rooted in the CBO’s estimates. Expect to see people using age as a proxy for determining whether insurers have an adequate mix of healthy and sick beneficiaries. This is imperfect—health status is really the more important metric, because the age band and tax credits mitigate the cross-subsidy from young to old—but it’s probably all we’ll have for awhile.

Adrianna (@onceuponA) 

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