HHS on Exchange Enrollees and Premiums

The Administration claims that 8 million Americans signed up for health insurance on the new public health plan exchanges during the first open enrollment period.  These numbers, however, are highly unlikely to be close to accurate once all reconciliation has been done and when we see who actually pays their premiums.  Also, even the Administration acknowledges that there were errors in information submitted by as many as a fourth of the enrollees, particularly in regard to subsidy eligibility.  So the last word hasn’t been written on really happened in this open enrollment.  HHS has issued its initial summary of plans selected, premiums and subsidies.   (HHS Report)  The data looks only at the 5.4 million people who enrolled in 36 states through the federal exchange.  Almost all people, 96%, lived in an area where there were at least two issuers on the exchange and 82% were in an area with at least three.  More issuers tended to be associated with lower premiums, each additional plan was correlated with a 4% lower benchmark premium (the second-lowest price silver plan’s cost), although this finding did not hold up when premiums across all plan types were examined.  And more issuers generally meant more types of plans.   An astounding 87% of enrollees said they were due a subsidy.  The IRS is intending to audit this but given levels of tax evasion and failure to report income, good luck on that.  About 70% of individuals who got tax credits had monthly premiums of $100 or less after the tax credit and about 46% had monthly premiums below $50.  The average reduction due to the subsidy was about 76%, from $346 per month before subsidy to $82 after.  One interesting incidental finding was that premiums on all levels of plans were higher in markets with greater hospital concentration.

A number of caveats are in order.  While the Administration says the cost of the subsidies appears to be consistent with projections, the lack of participation by healthier people inevitably means costs are going up, and the subsidies will go up with them.  And the revenues generated by the various taxes and penalties imposed by the law will likely fall short.  So the deficit will be increased by the law.  It should be noted that even $50 a month is a lot for low-income people.  It will be interesting to see how many actually pay their premiums.  It should also be noted that unless there was a subsidy, most people weren’t going to sign up, indicating how little need most of the uninsured actually had for health insurance.  Young healthy people in particular appear to be deciding that they aren’t going to be bullied into getting health insurance.  And finally, while HHS is celebrating how affordable the subsidies are making insurance, those subsidies represent taxes that raise the cost of other people’s insurance, the cost of medical products and do damage to the economy that we all live in.