Early ObamaCare Exchange Demographics Worse Than Under RomneyCare In Massachusetts In 2007

Posted: Jan 14 2014, 11:56pm CST | by


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Early ObamaCare Exchange Demographics Worse Than Under RomneyCare in Massachusetts In 2007
Photo Credit: Forbes

On occasion a chart can be worth more than a blog post with 1,000 words. Since many point to Massachusetts as a harbinger of what is ahead under the ACA, here is some contrasting data to consider. While Massachusetts is not representative of the entire country from a population standpoint, the exchange trends might be helpful to monitor. It should be noted that the Massachusetts exchange demographics have only gotten worse overtime, i.e. older and presumably more medically needy (43% over 40 in 2007, 58% over 40 in 2013). This trend should worry national policymakers as the early ACA numbers are so skewed to pre-Medicare aged folks in the exchanges.

The Exchange Population In Massachusetts Is Now Much Older

As reported in the media, the first three months of ObamaCare exchange enrollment has been older (55% over 45), supporters of the law are crossing their fingers, and praying hard that younger folks do show up late to sign up to diversify the risk pool. However, if Massachusetts is predictive, even with the different age categories above, Massachusetts was still far less old (as a percentage of total enrollment) when they started the exchange in 2007, even when you move the “older adult” bucket down an extra 5 years to age 40.

Massachusetts Was Off In Original Exchange Estimates

It should be noted that in a state with thousands of recent university graduates settling every year, the Commonwealth still attracted an older crowd to the exchange.  As you see below, the exchange saw greater numbers of older adults and female enrollees than expected. This trend has deepened over time, and should serve as a warning to watch for under the ACA.

Avik is right to note that at the national level, “There is reason to believe that things will get slightly better with time. The people who needed coverage right away- and were bound to sign up right away- were those most in need of someone to pay for their immediate health-care needs. But the law was designed from the beginning to increase the cost of coverage for healthier and younger people, in order to make coverage a better deal for the sick.”

There is some evidence in Massachusetts that younger people waited to sign up, (although the data set cited in only premium paying members not the majority that came in for free coverage) but it is unclear if the numbers the Administration needs will do so nationally with such a slow start in the first three months.

Early Subsidy Phase Out Could Explain Young Adults Not Showing Up

Soon to be published research will put a fine point on the challenge that is ahead for the White House, as the paper shows the quick phase out of the subsidies for younger adults. For example in Arkansas, due to the complicated nature of how the subsidy is calculated, and the pricing of the exchange options, the subsidy is unavailable for an average 18-20 year old above 219% FPL, unavailable above 275% FPL for an average 21-25 year old, moving slow up until it is unavailable after 310% FPL for a 35 year old. This may help to explain the low enrollment on the exchange of those NOT receiving a subsidy.  Once the numbers are run, most appear to only sign up if they will receive a subsidy, or at least 80% of them.

Source: Bloomberg BusinessWeek

Without an improvement in the demographic numbers over the next

couple months, the financing of the exchanges will be called into question, and the insurers will demand even greater protection for offering coverage to an older and sicker population than expected. Meanwhile, taxpayers will have to stand back and watch the price tag of the law go up while additional individuals join the 30+ million that will remain uninsured.

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INVESTORS’ NOTE: Aetna, UnitedHealth, WellPoint , Molina, and Humana are leading players in developing products for health insurance exchanges. Public exchanges, started open enrollment on October 1, and are a key feature of Obamacare’s efforts to expand health insurance coverage.

(H/T to Ian Duncan and Ryung Suh from some of the Massachusetts demographic data in an unpublished report, “Massachusetts Health Insurance Reform: Promise and Results: Impact on Insurance Markets, Pricing, and Profitability”

Source: Forbes

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