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Surprises Hidden in Administration's Health Law Numbers

By John Reichard, CQ HealthBeat Editor

May 5, 2014 -- The latest health law sign-up report from the Obama administration revealed some surprises that were overshadowed by the much-reported metric that 8 million people have applied for coverage in the new insurance marketplaces.

There has been fairly strong interest in exchange coverage in states with Republican governors bitterly opposed to the law. And outreach efforts to the Latino population have so far yielded unimpressive results.

Overall, the state-by-state figures for exchange plans, Medicaid and the Children's Health Insurance Program offered a rich vein of data as plans gear up for the next open enrollment period that begins just over six months from now.

Some of the takeaways:

  • Enthusiasm in states whose leaders want no part of the law. The 36 states whose leaders walked away from hundreds of millions in federal dollars to help create their own exchanges collectively saw more than twice as many people sign up for marketplace plans as in the 14 states and the District of Columbia that created their own exchanges.

Although the uninsured populations in the 36 states are obviously bigger than in states that run their own marketplaces, the contrast was noteworthy. The federal insurance exchange serving the 36 states signed up 5.4 million people compared to 2.6 million for the state exchanges. In Florida, 428,000 people had signed up for a marketplace plan through April 19; in Texas, the figure was 223,000.

People picking marketplace plans in Florida made up 39 percent of those eligible, according to the Kaiser Family Foundation. Florida wasn't far behind California, where the figure was 43 percent, and it was well ahead of Maryland, which only signed up 16 percent of those eligible. The federal government gave California and Maryland hundreds of millions of dollars to set up exchanges and conduct outreach.

Both Florida and North Carolina "have both blown their projections out of the water," said Caroline Pearson, vice president of the Avalere Health consulting firm.

  • Latino populations remain slow to sign up. The Hispanic community hasn't been gravitating to exchanges the way health law supporters had hoped. Obama administration officials said their data was preliminary and incomplete, so the final figures may produce different conclusions. But compared to the population eligible for exchange enrollment, "Asians and African-Americans were somewhat overrepresented; Latinos underrepresented," said Washington and Lee University law school professor Timothy Jost in a Health Affairs blog post.

"Spanish language enrollment materials were late in coming, and although there was a surge in enrolling Latinos at the end, enrollment fell short," he said.

Mayra E. Alvarez, the associate director for the Office of Minority Health at the Department of Health and Human Services, told reporters last week that the enrollment of minorities was an "important first step forward in addressing disparities" but that "we recognize there is more work to do."

The information in the enrollment report on ethnicity and race does not include data from state-run marketplaces, including those in places like California and New York. The overall results could change when that information is added.

  • Signups exceeded expectations. According to the Urban Institute, as of April 19 the marketplaces signed up 115 percent of those projected to apply for coverage. Its projections were based on the Congressional Budget Office's original estimate that 7 million people would be enrolled in exchange plans in 2014.

Whether the final tally will actually beat those projections is unclear. Some of the 8 million enrolled through the exchanges won't actually pay their premiums and get health coverage. "On the other hand, others will enroll in marketplace plans after April 2014 because of special enrollment periods," the institute notes.

A separate analysis by the Avalere Health found that exchange enrollment met or beat expectations in 22 states. "Even after accounting for potential nonpayment, enrollment exceeds 100 percent of projections in nearly half of states," said Avalere's Pearson.

Avalere assumed 15 percent of those who signed up wouldn't pay premiums. Its projections were based on a revised CBO projection that 6 million people would enroll, not seven million because of online enrollment malfunctions.

That enrollment will come close to CBO projections and perhaps even exceed it, despite political hostility, multiple technical glitches in the federal website and other factors demonstrates the marketplaces were able to offer products that were in demand, despite predictions to the contrary.

Rep. Henry A. Waxman, D-Calif., was declaring victory last week. "Medicare Part D enrollment, which Republicans hailed as an unqualified success, only reached 70 percent of its CBO estimated enrollment," he told an American Hospital Association meeting in Washington, D.C.

But health law supporters will still have to hold their breaths. Much of the coverage sold on exchanges has high deductibles. When Americans of modest means who are straining to pay their first premiums find that out later this year, its unclear how many will opt to re-enroll.

  • The uninsurance rate appears to have dropped. Hundreds of thousands, if not millions of people, saw their policies canceled last fall because the coverage packages didn't comply with the health law. Some coverage was restored when the administration scrambled to limit the political fallout. Others signed up for new plans.

Congressional Republican have asserted that the cancellations mean the law may actually be producing a net drop in coverage. But evidence increasingly points to a large net increase.

Surveys by Gallup, the Rand Corporation, and the Urban Institute all reported declines in the percentage of uninsured Americans since open enrollment began last fall. An updated Gallup survey released recently found that the percentage of U.S. adults without health insurance fell to 13.4 percent in April, down from 15.6 percent in the first quarter of 2014 and 17.1 percent in the fourth quarter of 2013.

Apart from marketplace plans, enrollment since the open enrollment period began has swelled in Medicaid and the Children's Health Insurance Program. It's unclear how many were previously uninsured, but the sheer numerical increase suggests a substantial number were without coverage. As of March Medicaid and CHIP enrollment had grown by 4.8 million compared to the total as of Oct. 1 last fall.

  • Subsidies really matter. By the end of the open enrollment period, 85 percent of those selecting marketplace private plans got financial assistance in the form of tax subsidies to help pay premiums. Many more were eligible for subsidies–3.6 million–but did not pick a plan. That could mean there's lot of room for enrollment growth or that that the coverage is too costly, even with the promise of subsidies. Time will tell.
  • Some markets may be in trouble. Despite the national trend toward higher-than-projected marketplace enrollment, signups in some states were low relative to size of the uninsured population. Pearson rated Hawaii, South Dakota, West Virginia, New Mexico, and Iowa as states "where you worry that the markets may not be sufficiently attractive" to insurers.

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