There have been numerous discussions in the media about the numbers of folks signing up for Obamacare policies. Almost none of these articles get into the real numbers. They focus on one aspect or another, but they never put the whole thing together. If one does, it is clear that Obamacare is already dead on arrival.
Let's start with the facts that cannot be disputed:
1. In order for Obamacare to work, there must be young, healthy people who buy insurance policies. The money these folks pay into the system is the pot of cash that is intended to cover the costs of the older, sicker people who also buy insurance. Everyone, from the biggest critic of Obamacare to its biggest supporter, agrees that if the young do not sign up, the program will enter into a "death spiral" and will self-destruct.
2. The Obama administration set two goals for the current open enrollment period for Obamacare policies. First, the administration wanted to get 7,000,000 new insurance policies sold through the exchanges. Second, the administration also set a goal of 40% of the new policies being bought by 18-34 year old purchasers. These goals are obviously approximate (although my guess is that they are low ball figures used to try to make the administration look good) Let's take them at face value. The Obama administration itself, therefore, set a goal of 2.8 million new policies sold to 18-34 year olds.
3. No one added to the rolls of the insured through Medicaid counts towards meeting the goal of 2.8 million new policies. Medicaid recipients do not pay for their coverage. Thus, they cannot be used to subsidize the cost of covering the older, sicker folks added to the risk pool.
4. No one who simply transfers from one policy to another purchased on the exchange counts towards meeting the goal of 2.8 million new policies. Replacement policies do not add new funds to the insurance pool, so they cannot be the source of subsidies for the old and sick.
Now let's look at what has actually been sold through the exchanges.
a. According to the White House, there have been between 3 million and 3.1 million policies selected on the federal and state Obamacare exchanges. These are policies where someone has put a plan into his or her basket on the exchange, not policies for which the purchase was completed. Indeed, the White House says that it cannot determine how many plans were actually paid for, a necessary step before the insurance goes into effect. Surveys done of early numbers showed that between 5 and 15% of the people who selected plans actually completed the purchases. Since that was done in the first months of the program when the need for insurance was not immediate (the plans did not go into effect until January 1 at the earliest), that 5 to 15% number is most likely low. Let's assume that the actual number is much higher. Let's more than triple that rate of completion and use 50%. That would mean that through January 24th (2/3 of the way through the open enrollment period) there were about 1.55 million policies sold on the exchanges.
b. We know, however, that many of the policies sold on the exchanges have been purchased by people whose insurance was cancelled or who just wanted to switch to an Obamacare plan. Surveys done to date have indicated that only 11% of the policies actually purchased were new plans; the rest were replacement policies. That would mean that the number of new policies sold through January 24th is about 170,000 (11% of 1.55 million).
c. We also know, however, that not all of the new policies sold are to buyers in the 18 to 24 age bracket. According to the latest figures, only 24% of the insurance sold on the exchanges was bought by buyers in that age group. That would translate into 41,000 new policies sold to buyers in the 18-24 age group. (.24 of 170,000).
d. Obviously, the surveys just discussed are just surveys; they are not actual counts, but rather are estimates based upon sampling by accounting or consulting firms. They may be wrong. If both of the surveys are too low, however, the correct number almost certainly is not more than twice the figure computed above. At the most, then, the number of policies sold to new buyers in the 18-34 age group is 80,000.
Remember that the target set by the administration is to sell 2.8 million new policies to the 18-34 year old buyers. Two-thirds through the selling period, the administration has sold between 1% and 2% of the target amount.
Barring a major change in how sales proceed, we can already conclude that Obamacare is dead on arrival. There is no way for this program to recover.
Let's start with the facts that cannot be disputed:
1. In order for Obamacare to work, there must be young, healthy people who buy insurance policies. The money these folks pay into the system is the pot of cash that is intended to cover the costs of the older, sicker people who also buy insurance. Everyone, from the biggest critic of Obamacare to its biggest supporter, agrees that if the young do not sign up, the program will enter into a "death spiral" and will self-destruct.
2. The Obama administration set two goals for the current open enrollment period for Obamacare policies. First, the administration wanted to get 7,000,000 new insurance policies sold through the exchanges. Second, the administration also set a goal of 40% of the new policies being bought by 18-34 year old purchasers. These goals are obviously approximate (although my guess is that they are low ball figures used to try to make the administration look good) Let's take them at face value. The Obama administration itself, therefore, set a goal of 2.8 million new policies sold to 18-34 year olds.
3. No one added to the rolls of the insured through Medicaid counts towards meeting the goal of 2.8 million new policies. Medicaid recipients do not pay for their coverage. Thus, they cannot be used to subsidize the cost of covering the older, sicker folks added to the risk pool.
4. No one who simply transfers from one policy to another purchased on the exchange counts towards meeting the goal of 2.8 million new policies. Replacement policies do not add new funds to the insurance pool, so they cannot be the source of subsidies for the old and sick.
Now let's look at what has actually been sold through the exchanges.
a. According to the White House, there have been between 3 million and 3.1 million policies selected on the federal and state Obamacare exchanges. These are policies where someone has put a plan into his or her basket on the exchange, not policies for which the purchase was completed. Indeed, the White House says that it cannot determine how many plans were actually paid for, a necessary step before the insurance goes into effect. Surveys done of early numbers showed that between 5 and 15% of the people who selected plans actually completed the purchases. Since that was done in the first months of the program when the need for insurance was not immediate (the plans did not go into effect until January 1 at the earliest), that 5 to 15% number is most likely low. Let's assume that the actual number is much higher. Let's more than triple that rate of completion and use 50%. That would mean that through January 24th (2/3 of the way through the open enrollment period) there were about 1.55 million policies sold on the exchanges.
b. We know, however, that many of the policies sold on the exchanges have been purchased by people whose insurance was cancelled or who just wanted to switch to an Obamacare plan. Surveys done to date have indicated that only 11% of the policies actually purchased were new plans; the rest were replacement policies. That would mean that the number of new policies sold through January 24th is about 170,000 (11% of 1.55 million).
c. We also know, however, that not all of the new policies sold are to buyers in the 18 to 24 age bracket. According to the latest figures, only 24% of the insurance sold on the exchanges was bought by buyers in that age group. That would translate into 41,000 new policies sold to buyers in the 18-24 age group. (.24 of 170,000).
d. Obviously, the surveys just discussed are just surveys; they are not actual counts, but rather are estimates based upon sampling by accounting or consulting firms. They may be wrong. If both of the surveys are too low, however, the correct number almost certainly is not more than twice the figure computed above. At the most, then, the number of policies sold to new buyers in the 18-34 age group is 80,000.
Remember that the target set by the administration is to sell 2.8 million new policies to the 18-34 year old buyers. Two-thirds through the selling period, the administration has sold between 1% and 2% of the target amount.
Barring a major change in how sales proceed, we can already conclude that Obamacare is dead on arrival. There is no way for this program to recover.
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