January 13, 2014 -- Federal officials reported last week that nearly 2.2 million Americans through Dec. 28 selected health plans from federal and state insurance exchanges. The officials said they are pleased with the sign-up rate by the key demographic group of young Americans, even though so far the percentage of young adults is lower than what the Obama administration has said will be needed by the time that open enrollment ends on March 31.
About 55 percent of the 2,153,421 people who had signed up by Dec. 28 were 45 years old or older, according to the Department of Health and Human Services (HHS) report. Another 15 percent were 35 to 44 years old. People in those age brackets tend to have higher costs than younger people.
About 30 percent were age 34 and under, the agency said.
That group of younger people includes some individuals who were under age 18, presumably dependents of those who have picked a plan. The proportion of people in the 18 to 34 group was 24 percent, roughly in line with the percentage that group makes up of the general population, which is 26 percent.
Some analysts have used 40 percent as a benchmark of what slice of the exchange population should be under age 34 in order to assure there are enough healthy people in the pool to offset the costs of insuring older enrollees. The 30 percent figure isn't far from that—and federal officials said during a mid-day telephone press briefing that it will grow.
"We'll see more and more younger people coming in," predicted Gary Cohen, the director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services.
"Many of them may have applied and not chosen a plan because they want to think about it, they want to shop around," Cohen added.
Regarding the under age 34 group Cohen said that overall, "We're actually very pleased with the percentage that we have so far and we expect that percentage to increase." That was the experience in the state of Massachusetts when it launched its coverage expansion plan several years ago—that young people came in much larger numbers at the end of open enrollment.
An outside health policy expert echoed that view.
"I expect more young people to sign-up for coverage as open enrollment continues, so the age mix should continue to improve from this point forward," said Avalere Health consultant Caroline Pearson. "The people who signed up early in open enrollment are most likely to be those with high health care needs, which tends to be an older population."
Overall Turnout Important
Robert Laszewski, a leading insurance industry analyst, warned that the balance of young and old Americans in the marketplaces is an issue that has been overblown. The overall turnout is key, he said, adding that it's much too low so far to feel any confidence about the long-term success of the health law.
Laszewski said in an email that it's "dead wrong" to say, as some in the administration have, that total enrollment isn't as important as the age mix of enrollees.
The access that people with costly preexisting medical conditions are guaranteed under the health law (PL 111-148, PL 111-152) means that a very large group of people have to have coverage in order to offset their costs and keep premiums affordable for all, he said.
Assuming the health care law's target audience is some 30 million uninsured people, 70 percent of them must be enrolled in order to absorb costs, he said. For the exchanges to be successful they are going to need to climb to an enrollment of 20 million people, Laszewski said.
But he suggested that target is going to be very hard to reach because insurers at some point will jack up rates if too many of their new enrollees are unhealthy. A reinsurance and "risk" corridor program under the law will absorb their early losses, he said. It will do so sufficiently to keep insurers from jacking up their rates in the exchanges in 2015, he added.
But after that rates will quickly rise and become unaffordable if there's an imbalance of bad risks, which he indicated there will be because so many sick people will make coverage a priority.
So raw enrollment totals matter a great deal—and Laszewski is dubious that the exchanges will be able to reach a large enough total enrollment, given the limited patience insurers will have about keeping rates down.
Michael Hash, another HHS official, said during the press briefing that the size of enrollment is important, but so too is the age mix.
"We think that the marketplace requires that we successfully state by state enroll as many people as we can. The trends so far as we released in this report are suggestive of an appropriate mix in the marketplace, but again, to remind you, we are only halfway through the open enrollment period and we expect an increase in the proportion of young adults as we go forward," he said.
The report also included a state-by-state breakdown of enrollment totals. States with their own marketplaces appear in general to be amassing far greater enrollments than those served by the federal exchange website. The state of Florida, which has 3.5 million uninsured, reported that only 158,030 individuals have selected a plan.
The report contained additional details that HHS has not provided before. About 54 percent of the people who signed up were female and 46 percent were male.
So far, most people were choosing the least-expensive plans. About 20 percent of enrollees chose the bronze-level of coverage, which has the cheapest monthly premiums. Another 60 percent chose the silver level. People who sign up for silver-tier plans also are eligible for additional cost-sharing subsidies if their income is 250 percent of the federal poverty level or less.