Exchanges See Little Progress on Uninsured

Early signals suggest the majority of the 2.2 million people who sought to enroll in private insurance through new marketplaces through Dec. 28 were previously covered elsewhere, raising questions about how swiftly this part of the health overhaul will be able to make a significant dent in the number of uninsured.

  • Insurers, brokers and consultants estimate at least two-thirds of those consumers previously bought their own coverage or were enrolled in employer-backed plans.
  •  An Ohio-based insurance broker said he has dismantled about 50 small employer-backed plans, some of which are steering workers to the new marketplaces.
  • An insurance agency that enrolled around 7,500 people in exchange plans, said 65% of its enrollees had prior coverage. Around 10% were dropping out of employer coverage, either because the employer stopped offering its plan or because they could qualify for subsidies on the marketplaces. Fifteen percent had previous individual plans canceled, and 40% decided to switch into coverage bought through an exchange from previous individual plans.
  • The data, based on surveys of enrollees, are preliminary. But insurers say the tally of newly insured consumers is falling short of their expectations, a worrying trend for an industry looking to the law to expand the ranks of its customers.
  • Only 11% of consumers who bought new coverage under the law were previously uninsured, according to a McKinsey & Co. survey of consumers thought to be eligible for the health-law marketplaces. The result is based on a sampling of 4,563 consumers performed between November and January, of whom 389 had enrolled in new insurance.
  • One reason for people declining to purchase plans was affordability. That was cited by 52% of those who had shopped for a new plan but not purchased one in McKinsey’s most recent sampling, performed in January. Another common problem was technical challenges in buying the plans, which 30% mentioned.
  • At Michigan-based Priority Health, only 25% of more than 1,000 enrollees surveyed in plans that comply with the law were previously uninsured, said Joan Budden, chief marketing officer.
  • The trend underscores a central test for the health law, whose marketplaces are meant to steer a broad cross section of new paying customers to private insurers. “One of the intents of the law was to address the uninsured problem in our country,” said David M. Cordani, chief executive of insurer Cigna Corp. Cigna doesn’t yet know what coverage its health-marketplace enrollees previously held.
  • Many health plans and providers are looking for the expansion of coverage to fuel growth. Insurers need to draw healthy uninsured people to offset costs, given that plans can no longer deny coverage to people with pre-existing conditions.
  • Department of Health and Human Services officials have said they don’t yet know the number of people who have signed up for coverage through the exchanges who had insurance at the time of their enrollment.
  • The health law is chipping away at the number of uninsured consumers in other ways. At least four million people are expected to join Medicaid rolls in the coming months.
  • But so far, health-plan executives say, subsidies to buy insurance in the marketplace, and broader changes to the law, seem to be encouraging many already-insured people to seek better rates.
  • In addition, some small companies are cutting back on coverage now that their workers can buy through the marketplaces, insurers and brokers say.
  • At Priority Health, about 25% of health-law customers had employer-supported plans last year, Ms. Budden said, while 50% bought their own coverage last year. Of the latter group, about half are getting subsidies.
  • “I don’t know we’re growing the number of people with insurance here, so much as we’re just adding complexity,” said Geoff Bartsh, vice president for policy at Medica Health Plans in Minneapolis.
  • It isn’t surprising that some percent of new purchasers of private health insurance are people who had insurance before. About 66% of people buying new individual health plans in early 2011 were covered by employer-backed plans in late 2010, according to a Kaiser Family Foundation analysis of federal survey data prepared for The Wall Street Journal. About 20% of enrollees in early 2011 were previously uninsured, the analysis found.
  • There is “massive churn in the individual market, and always has been,” said Larry Levitt, senior vice president at Kaiser. “It wouldn’t surprise me if many [health-law enrollees] were insured in the last year,” he said, but “that doesn’t mean they wouldn’t have ended up uninsured if not for the exchanges.”

*Modified from a WSJ.com article

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