ObamaCare Enrollment Mystery: 2 Million Young Adults Missing

ObamaCare exchanges have just met a target of 2.8 million young-adult enrollees. The bad news: That target was for last year.

By now, there were supposed to have been roughly 5 million paying customers between the ages of 18 and 34. Lagging young-adult enrollment is among the reasons why so many big insurers on the exchanges are seeking premium hikes of 20% or more for 2016.

Among the 11.7 million people who selected 2015 exchange plans, 1.5 million never paid or quickly canceled their coverage, the Department of Health and Human Services reported Tuesday. That left 10.2 million paying enrollees.

The report also hints at why so many young adults aren't bothering to enroll despite the threat of individual mandate tax penalties. Those selecting bronze plans were 40% more likely to fail to pay than those selecting silver, gold or platinum coverage. While relatively few people selected catastrophic coverage, those who did were three times more likely to drop coverage than those selecting more comprehensive plans.

Sticker Shock

The takeaway is that Americans are reluctant to pay the asking price for plans with deductibles this year as high as $6,600. That may be especially true of young adults, who get a worse deal from ObamaCare than do older adults and who may not be especially worried about racking up big medical bills.

Kaiser Family Foundation analysts derived the first-year enrollment target of 2.8 million 18- to 34-year-olds from the Congressional Budget Office's 2014 projection of 7 million customers overall and their own research that young adults make up 40% of eligible exchange members.

Instead, young adults accounted for just 27.9% of exchange sign-ups during this year's open enrollment. That means about 2.8 million 18- to 34-year-olds have ObamaCare exchange coverage — fewer if they made up an outsize share of those who didn't pay.

Yet the CBO expected 2015 exchange enrollment to hit 12 million, reining in its prior estimate of 13 million after participation fell short in 2014. If enrollment had kept up with independent projections, there should have been 4.8 million to 5.2 million young-adult members.

In other words, 18- to 34-year-old enrollment has fallen short by about 2 million to 2.4 million, or more than 40%.

Meanwhile, the number of people age 55 and over who have joined the exchanges is 29% above forecasts.

There are 1.1 young adult enrollees for every member age 55+. That young-to-old ratio was supposed to be 2.4-to-1.

ObamaCare's demographic mix is key because the law bars insurers from charging 64-year-olds more than three times the premium charged to 21-year-olds.

Before ObamaCare, older adults in the individual insurance market were charged up to five times more because their expected costs were, on average, about five times greater than the youngest adults.

Under ObamaCare, "older adults will be paying premiums that do not fully cover their expected medical expenses, while younger adults will be paying premiums that more than cover their expenses," Kaiser Family Foundation researchers Larry Levitt, Gary Claxton and Anthony Damico explained.

But the math doesn't work so well if young-adult enrollment lags behind, causing health and administrative costs that exceed premium revenue. The obvious response: increase premiums.

The Kaiser analysts note that a less-than-ideal age mix won't, by itself, make a huge difference. A much bigger concern would be if those who enroll have above-average medical costs for their age.

Not A Healthy Mix

The widespread requests for large premium hikes in 2016 suggest that insurers in many parts of the country are indeed finding that the older-than-expected exchange population is ringing up higher-than-expected costs.

For example, Blue Cross and Blue Shield of Oklahoma wants to raise premiums 31% for its 137,506 ObamaCare plan members. Its costs last year swamped premium revenue by 35% — even after factoring in government payments to insurers if the exchange population turned out to be less healthy.

"Actual claims experience of the members in these individual ACA (Affordable Care Act) metallic policies is significantly higher than expected," Blue Cross and Blue Shield of Oklahoma said in a filing.

About 200,000 people signed up in the special enrollment period in April that provided one last chance to avoid paying the individual mandate penalty. They could modestly alter the data reported here.

On the other hand, ObamaCare's 90-day grace period means that some people who stopped paying for coverage are still counted as enrolled.