ObamaCare Sign-Up Old-To-Young Ratio Opposite Of Healthy

ObamaCare exchanges in eight states have signed up at least twice as many adults over age 54 as under 35 — the opposite of what experts say would make up a stable risk pool.

Kaiser Family Foundation experts have found that 40% of potential enrollees nationally are 18 to 34, while 17% are at least 55.

The exchange pools, they say, should roughly mirror that mix of about 2.4 younger enrollees for every older person. That's because ObamaCare charges younger people extra (before any subsidies) so that older people can be charged less without negating insurer profits.

"If enrollment among young adults falls short ... (and) if insurers believe that those enrollment patterns will continue into 2015, then they may raise premiums higher to compensate for the loss," wrote Kaiser Family Foundation analysts Larry Levitt, Gary Claxton and Anthony Damico.

To date, 16 state exchanges are seeing older-vs.-younger exchange sign-ups more than four times what these experts judge as sustainable without upward pressure on premiums.

Across the country, the ratio of older vs. younger enrollees is more than triple the desired mix.

All Must Stand, Few Can

The data through the halfway mark of first-year ObamaCare exchange enrollment underscore two key points: 1) The first big test of ObamaCare's workability hinges on young-adult enrollment over the next three months; and 2) each exchange will rise or fall independently, based on the demographics and health of its own members.

Through Dec. 28, 2.15 million people selected (but did not necessarily pay for) an ObamaCare exchange plan — far below the first-year goal of 7 million. Of those, 33% were at least 55 vs. 24% in the 18-to-34 age group.

Thus the older-to-younger sign-up ratio stands at 1.4 — more than triple the 0.4 older-to-younger ratio in the potential pool.

Still, the Kaiser authors have noted that they don't expect big premium hikes and pointed to the health of enrollees as even more important than their age.

The eight states seeing the highest proportion of older vs. younger enrollees are West Virginia (2.6 to 1); Maine (2.4); Wisconsin (2.4); Arkansas (2.2); Ohio (2.2); Arizona (2.1); New Mexico (2.1); and Vermont (2.0).

Demographics are partly at work. Somewhat stale 2010 Census data show that the states with the highest ratio of 55- to 64-year-olds vs. 18- to 34-year-olds were Maine, West Virginia and Vermont. But even among those outliers, young adults easily outstripped the number of older adults.

In addition to those states, the ratio of older-to-younger enrollees is at least four times the right balance in eight others: Indiana, Delaware, Washington, Iowa, Montana, New Hampshire, Connecticut and Florida.

It's not surprising that older, less healthy people would feel a greater sense of urgency to enroll in time to get coverage in January. The White House and various health analysts are expressing optimism that enrollees will skew younger for the final three months of open enrollment.

That happened to some extent in Massachusetts when RomneyCare launched in 2007. One important difference is that RomneyCare-subsidized plans for those earning up to 300% of the poverty level carried no deductible. Compare that with the common $5,000 per-person deductible (or $10,000 family deductible) for an ObamaCare bronze-level plan.

Come March, people who are income-constrained may start to weigh the chances that their health expenses will exceed the deductible amount over the nine months until they'll be eligible for a 2015 policy.

The individual-mandate tax penalty starts small in 2014 at just 1% of income above the tax-filing threshold, rising to 2% in 2015.

'Risk Mix' Is 'Adverse'

Humana (HUM) said in a filing last week that it expects "the risk mix of members enrolling through the health insurance exchanges to be more adverse than previously expected.

Humana blamed the decision by the White House and state regulators last month to let people stay on plans that were being canceled as ObamaCare's exchanges were launching.

For now, it's impossible to draw firm conclusions. It remains to be seen how many people will eventually pay for plans, as well as how old and healthy they'll be. A further uncertainty is that insurers in a state exchange can also sell individual plans off the exchange, but those are treated as the same risk pool. There's no good data about off-exchange plans yet.

Finally, it's unclear how insurers will react if the risk mix is much worse than hoped in year one. ObamaCare provides several financial backstops or bailouts to minimize insurer losses in the first three years. With the exchange population projected to balloon to 22 million by 2016, they may not be quick to hit the panic button.