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CBO Changes 2015 Enrollment Estimates

Federal and state health insurance exchange sites are open for business as of Nov. 15 with high hopes for re-enrollment among satisfied enrollees. However, in a brief issued by the U.S. Department of Health & Human Services on Nov. 10, government officials suggested that the actual number of enrollees for 2015 would be much smaller than previously anticipated. These newer projections are based on a slower ramp-up period over a longer time frame.

Instead of the projected 13 million enrollees suggested by the Congressional Budget Office in April 2014, the HHS now proposes that approximately 9 million individuals will enroll by the end of 2015. Citing overenthusiastic methods used by the CBO in its initial enrollment predictions as the prime culprit for the decreased estimates, the HHS offers a more conservative estimate for the number of enrollees based on more realistic expectations.

Early Predictions

In April, the Congressional Budget Office suggested that 13 million Americans would sign up for health insurance using federal or state-run health insurance exchange sites. This number was based on presumptions about projected yearly increases in the total number of enrollees. By 2017, the CBO supposed that 25 million people would enroll in health insurance. This number represents the “steady state” or fully implemented number of insured individuals.

The HHS argues that three years is insufficient time for a program like Obamacare to reach its steady state. With any new program, different variables affect long-term projections. At a four-year ramp-up timeline, the CBO’s estimates decrease from 13 million to 11.5 million. Allowing a five-year ramp-up time, the estimate decreases to just 9 million. The key factor here is the ramp-up time or the time it takes for people to get on board the new healthcare system.

Also contributing to the disparity between early and current estimates is the fact that fewer people than expected made the switch from off-marketplace insurance to an exchange plan. Experts expected more Americans to find better alternatives on the marketplace. However, more people stayed with their current coverage whether it was a private plan or a group health plan through work.

Initial Enrollment and Retention

The CBO based some of its early projections off of the activity of the new marketplace, and it lacked the benefit of the final enrollment numbers. As of October 2014, approximately 7.1 million people are enrolled successfully via the marketplace and have kept their insurance. Retention plays a large role in determining the success of a new program. In this case, Obamacare may be considered successful by its proponents. About 8 million people enrolled in a health insurance plan via the exchange in 2014, and nearly 88 percent of those individuals kept their insurance.

Enrollment projections for next year also must take into account marketing to people without insurance. In 2014, the focus was on the millions of Americans without insurance. Since that number has decreased by about 10.3 million individuals, experts worry that targeting specific uninsured Americans will be more challenging for 2015. In essence, it’s much harder for officials to predict how the uninsured will respond to increased marketing this year. People who needed insurance but who didn’t sign up last year may be even less likely this year to enroll.

Despite the lower enrollment predictions, retention estimates for those 7.1 million insured via the marketplace are encouraging. Experts assume that approximately 83 percent of these individuals will keep the plans they have now, which is a promising sign for the future of the health insurance exchange sites. Gallup polls and other surveys conducted on consumer satisfaction indicate that enrollees have been generally pleased with the level of service and the quality of their care under the Affordable Care Act.

New Projections about Enrollment

The Congressional Budget Office originally predicted that 13 million people will sign up for health insurance using federal or state-run marketplaces in 2015, but the Health and Human Services Department disagreed by about 4 million people. In their report issued on Nov. 10, the HHS suggests that a closer estimate would be between 9.1 and 9.9 million people. The HHS does not disagree with the CBO’s prediction of 25 million enrolled once Obamacare reaches its steady state. However, the department believes that it will take an additional two years at least for the program to reach this state.

A slower ramp-up time for enrollees is one reason behind the discrepancy, but it’s not the only reason. The difference in calculations also depends on data gathering from both government agencies. The Congressional Budget Office used assumptions about marketplace activity to calculate its findings while the Health and Human Services department depended on multiple data to complete its calculations.

Based on data from census surveys, the initial open enrollment period and existing government programs that offer similar information, the HHS believes that a slower ramp-up time can be expected with Obamacare. Similar programs such as Medicaid, Medicare and the Children’s Health Insurance Program give glues as to the success of government-sponsored assistance platforms. These programs also suggest that a system as large as Obamacare will take time to implement fully.

Department officials also analyzed where enrollees would come from in 2015, taking into account uninsured individuals, people with off-marketplace plans and those with group coverage through work. The end result of the HHS calculations is that uninsured individuals will make up the majority of new enrollees. How these individuals will be targeted remains to be seen.

Contributing Variables

Additional factors contribute to the conservative estimates for next year. Predictions for 2014 overestimated the number of people who would switch from employer-sponsored group health plans to private plans on the marketplace. This portion of the population may change with time as people get new jobs, lose coverage or find better deals on the exchanges. Shifts in the opposite direction may also occur. Those with marketplace plans may drop coverage once they find a job that offers health insurance.

Verification processes have also resulted in loss of coverage for a small percentage of Americans in 2014. People who were unable to supply proof of income or those unable to confirm immigration status had their plans suspended or dropped, which left more than 200,000 families and individuals without coverage until they could verify their status. Income verification is necessary for those individuals and families seeking cost assistance in the form of subsidies. Without appropriate verification, many families will lose those subsidies.

Subsidies themselves have become a contested issue in recent months as several lower courts have heard cases regarding the legality of the program. In essence, challengers of the ACA claim that federal subsidies cannot be awarded to individuals who apply for them via the federal health insurance exchange site. Citing the text of the Affordable Care Act, opponents of the law state that subsidies only apply to people who use state-run exchange sites for coverage. The U.S. Supreme Court will hear and decide on this issue in the future. For now, questions about subsidies may hinder some families from applying for coverage despite insistence from the Health and Human Services Department that the program is currently legal and available to all eligible citizens.

One additional challenge facing the marketplace this year is the fact that currently insured individuals will be returning to the exchange sites along with new enrollees. The marketplace sites have yet to handle this kind of volume, and some experts suggest that the influx of enrollees may lead to confusion. The open enrollment period for 2015 lasts from Nov. 15 through Feb. 15, which is half as long as the initial sign-up period last year. Officials are concerned that the limited time frame may also impact enrollment.

Long-term success of the Affordable Care Act depends on political cooperation. As it stands, the program seems to be accomplishing at least one of its goals, which is to create a viable market of insurance options for people who previously had no such options. Based on projections for next year and surveys among participants, Obamacare may prove beneficial to the millions of uninsured people still living in America.