Blog PostJanuary 14, 2014

Health Sign-Ups Skew Older, Raising Fears Over Costs

Release of Data Shows Challenge in Persuading Young People to Enroll

Author: Louise Radnofsky and Christopher Weaver

Publication: Wall Street Journal


One-third of health plan enrollees in new insurance marketplaces are 55 or older, the Obama administration said Monday, a figure that insurers said makes the pool older than they would need to sustain their coverage at current premiums.

Administration officials said they are pushing to enroll more young people before a March 31 deadline for most people to get coverage for this year, and some cushions built into the law mean it won’t necessarily face trouble right away even if the 2014 pool of enrollees skews older.

Still, the release of the data, showing for the first time the age breakdown of people who had signed up for coverage through December, highlighted the challenge in persuading younger people who may not have a pressing need for health coverage to sign up for policies that can cost about $200 a month before subsidies.

“This is concerning to us that we’re seeing this portion come in so old,” said Marty Anderson, marketing director for the Wisconsin-based Security Health Plan, which serves rural counties in the state.

Just under a quarter of the roughly 2.2 million people who signed up for private plans nationwide by Dec. 28 were between the ages of 18 and 34, while one-third were in the 55-to-64 range, just short of the age at which most qualify for Medicare, the federal government program for the elderly. Kaiser Family Foundation, a health-policy think tank, has said census data suggest that about 40% of people who could be buying coverage through the exchanges are in the 18-to-34 group.

Administration officials said they had cleared a major hurdle by getting the federal website working for most users. That contributed to an enrollment surge in December, bringing the nationwide enrollment in private plans above two million after anemic numbers in October and November.

“Our ongoing work to improve is making a difference,” said Julie Bataille, a spokeswoman for the Medicare agency that has led the implementation of the law. “We know that the mix is important and that will be key to our outreach.”

Under the 2010 Affordable Care Act, consumers no longer pay premiums based on their health risks. To prevent a sharp rise in premiums in 2015 and beyond, carriers say they need strong enrollment from younger people who are likely to be healthier. That would balance out the bills racked up by sicker and older people.

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The health law also allows some young people to have the option of staying on their parents’ plans until their 26th birthdays. Insurers are trying to vacuum up the rest of the key demographic with a last-minute marketing push. Security Health Plan, for instance, is advertising on pizza boxes that its staff will help younger diners “unscramble health care gibberish” and get covered.

Still, the small share of younger customers “is more negative than we thought it was going to be,” said Allan Einboden, chief executive of Temple, Texas-based Scott & White Health Plan. “It would be nice if that were closer to 40%.”

Mr. Einboden added that age offered only a partial insight into the kind of medical claims new customers might incur.

“If you had a lot of people who were in the 18-34 [age] group because they were planning to have a baby, that would be a very negative demographic as well,” Mr. Einboden said. The health plan hasn’t yet begun receiving claims, he said, though several requests to preauthorize surgeries in the first days of coverage have executives worried, he added.

The health law allows for extra payments in the initial years to insurers that get stuck with an especially unhealthy pool of enrollees. That could limit the need for them to raise prices right away if the 2014 numbers aren’t favorable. Also, the law allows insurers to charge older enrollees up to three times as much as young people, adding some protection for an older pool.

The Kaiser Family Foundation report concluded, “It is important to attract the ‘young invincibles,’ but maybe with a greater focus on the ‘invincible’ part.”

Before the health-law rollout, fewer than 20% of enrollees in individual and family coverage were over age 55, said Jim Whisler, an actuary for Deloitte LLP, citing an analysis of health-plan data, including Deloitte clients.

“I would be quite concerned” about the new federal enrollment figures, Mr. Whisler said, but “it doesn’t mean it is a disaster.”

Supporters of the law say young people often wait until the last minute to get coverage. Aaron Smith, the executive director of Young Invincibles advocacy group, said his group and others were planning a campaign to ramp up around February’s Super Bowl and March’s NCAA basketball tournament.

Administration officials pointed to a Kaiser Family Foundation calculation that the marketplace could be sustainable even if only 25% of enrollees were in the 18-to-34 age group. Based on that report and Monday’s numbers, officials said they had already reached the range of preliminary sustainability.

Republicans disputed that.

“There’s no way to spin it: Youth enrollment has been a bust so far,” said Brendan Buck, a spokesman for House Speaker John Boehner (R., Ohio). “When they see that Obamacare offers high costs for limited access to doctors—if the enrollment goes through at all—it’s no surprise that young people aren’t rushing to sign up.”

The federal government is running insurance exchanges on behalf of 36 states, while 14 states and the District of Columbia are operating their own exchanges.

Each state is treated as a separate insurance market by health plans. Mixes ranged across the country, with West Virginia and Wisconsin each seeing that 45% of their enrollees through December are over 55, compared with 25% in Utah.

Overall enrollment numbers varied widely among states. Only 118,532 people enrolled in private plans in Texas, the nation’s second most-populous state after California, while 107,778 enrolled in North Carolina, which has fewer than half as many people.

California, which is among the states operating its own exchange and has more than six million uninsured residents in all, continued to lead the country in enrollment numbers, with 498,794 people reported to have signed up for private coverage.

—Colleen McCain Nelson and Jennifer Corbett Dooren contributed to this article.

Write to Louise Radnofsky at [email protected] and Christopher Weaver at[email protected]