Obamacare: 7 Million Signups Isn’t 7 Million Covered
When talking about health care the media has been conflating what are actually two very different things which just happen to contain the figure “7 million.” There is the 7 million signup benchmark for success set by the Obama administration and the 7 million covered by exchange plans projected by the Congressional Budget Office last year. While they may sound interchangeable they are not.
The Obama administration effectively “created” for itself a 7 million signup goal when HHS Secretary Kathleen Sebelius said on NBC news, “success looks like at least seven million people having signed up by the end of March.” The number the administration has been focused on is how many people sign up by merely selecting a plan via the exchanges. They have been focused on this data point because it is a figure we get immediately.
What really matters from a policy perspective is not how many people sign up but how many people actually get covered during the year, which requires paying their premiums. Having someone select a plan on an exchange, but then never follow up with the insurer — or immediately cancel — effectively does nothing. The number of people who are actually insured during the year is what matters so that is what the CBO’s projections are about. In addition the CBO is looking at the whole year unlike Sebelius’s statement which is only about the open enrollment period.
Not all 7 million who have selected a plan on the exchange will actually get coverage because they won’t follow through with paying their premiums. Sebelius said about 80-90% of people who have signed up so far have actually paid their first premium. If we assume roughly 15% of people won’t fully complete the process the roughly 7 million signups should translates to about 6 million people actually being covered by exchange policies this year.
It is possible the administration could cross their own 7 million signup benchmark for success but also fall short of the CBO’s earlier 7 million projection. The revised 6 million CBO projection may still prove to be more accurate.
While in the grand scheme it matters little if 6 million or 7 million people have exchange coverage during this year, we should be clear about what these figures mean. The media and politicians have done a poor job separating signups from those actually covered.