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Health Care & Life Sciences / Life Science & Biotech

In one chart: Obamacare exchange has failed to expand coverage in Indiana

March 13, 2014

The fundamental goal of Obamacare, before anything else, was to reduce the number of the uninsured.

The main way to do that was to require insurers to offer coverage to anyone who applied and then to give tax subsidies to help people buy private insurance via online exchanges.

But unfortunately, it isn’t working. At least not this year.

No matter how I slice the numbers, it looks like the Obamacare exchange in Indiana will fail to expand coverage this year. It isn't even close, really.

You can see that in the chart below. If you want the details on how I arrived at these numbers, skip down to the bottom of this post, under the heading "How I Crunched the Numbers."

But let me first say what I’m not saying.

I’m not saying Obamacare as a whole will not expand coverage in Indiana this year.

The law’s tax on individuals that do not buy health insurance could lead to an increase in coverage, either via increased participation in employer-sponsored health plans or a boost in Medicaid enrollment.

In fact, the Indiana Medicaid program had 35,000 more participants in February 2014 than it did in March 2013.

I’m not saying the Obamacare exchange won’t lead to an increase in coverage in 2015 or 2016. I actually expect it will.

But for 2014, based on the best data I can get my hands on, I must conclude that Obamacare's dreams of expanding individual insurance coverage in Indiana have simply failed. There's no getting around it.

How I Crunched the Numbers

My actual enrollment calculation (the light blue line at the bottom of my chart) relies on the exchange enrollment data reported each month by the U.S. Department of Health and Human Services. For the March data I relied on a projection by Avalere Health LLC, a D.C.-based consulting firm. It used the enrollment experience during the first year of the Medicare Part D program to estimate that 22 percent of the the total enrollment would come in the final month.

So, if the February enrollment reported by HHS, which was 64,972 for Indiana, is 22 percent short of the final number, then the final number will be 84,579.

And that's not even discounting for the roughly 20 percent of exchange enrollees who have been failing to pay their premiums, and therefore forefeit their coverage. If that trend continues through the end of March, actual Indiana enrollment in the Obamacare exchange could total only 68,000.

Perhaps enrollment will surprise everyone here in March, which is the last month of the open enrollment period for exchange coverage. But it would have to surprise by a huge amount to catch up to the other lines in my graph.

The top two lines (the blue line and the red line in my chart) show the expected enrollment for Indiana, which Avalere Health figured based on two nationwide projections put out by the Congressional Budget Office. That first prediction, issued in May 2013, envisioned total exchange enrollment of 7 million. A second prediction, issued earlier this year, envisioned nationwide enrollment of 6 million.

I took those total enrollment projections for Indiana and then calculated per month totals by using these assumptions: 22 percent of enrollment would come in both December and in March. The other 56 percent of total enrollment would come in equal parts in the other four months.

As you can see, both projections far exceed the reality on the ground.

But that's not the half of it. I can't see that the Obamacare exchanges are adding ANY net new enrollees to the individual marketplace so far.

I tried to think what would be break-even number for the Obamacare exchanges to get to. One answer is to calculate how many Hoosiers already had individual health insurance last year and had incomes that would have qualified them for Obamacare's subsidies. It's reasonable to assume that at least that many people would want to sign up for coverage on Obamacare's exchanges.

Of the 178,000 Hoosiers covered by individual health insurance last year, 63 percent of them had incomes that would have qualified for an Obamacare subsidy, according to an analysis of Census data by the Center on Budget and Policy Priorities. So that means 112,000 Hoosiers were already buying individual insurance last year and would get a tax subsidy to do so again in 2014.

But as you can see, these people (represented by the green line in my chart) would number far more than total Obamacare exchange enrollment so far.

Also, there are an estimated 108,000 Hoosiers whose individual health insurance policies were canceled last year because they did not meet the new rules required by Obamacare. So if the Obamacare exchanges simply enrolled all of those people, it would be at the levels shown by the purple line in my chart.

And yet, it is still far short of even that low-level goal.

Is it possible that nearly all the enrollees in the exchange were previously uninsured, and that most of the people with canceled policies are buying coverage in the off-exchange marketplace?

Maybe. But officials at Anthem Blue Cross and Blue Shield have told me the vast majority of their exchange customers had insurance coverage beforehand. Indianapolis-based MDwise tells me its enrollment has been a mix of the uninsured and the previously insured.

So I'm left to conclude that, for whatever reason, the Obamacare exchange has simply proved less attractive this year than the individual insurance that was available in Indiana a year ago.

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