Obamacare deadline 101: Do sign-ups above 6 million signal success?

Figures like total enrollment are clues to Obamacare's early performance. But they hint at a larger challenge: how to keep costs contained so more Americans can afford insurance.

As the sign-up deadline for Obamacare arrives, the White House says the total of more than 6 million enrollees shows the law is succeeding after a rocky start. Many critics say the opposite.

What you may not have heard in all the din is that the law’s success or failure isn’t easily reducible to a statistic like total enrollees as of March 31.

It won’t even be captured by tallying how many of the enrollees are young people – a factor often cited as vital because the age mix will affect costs of insurance over time.

Such numbers are important, but just part of the picture.

Perhaps the best way of gauging the Affordable Care Act’s success will be in the answers to three broad questions:

1. Is the share of Americans who are uninsured falling considerably?

2. Does the pricing of insurance remain affordable for people who shop on the Obamacare marketplaces (also called exchanges)?

3. Do people feel positively about the health care they end up getting under the law?

Those questions don’t yet have clear answers, but health policy expert Drew Altman says questions including these are the right metrics to be watching.

“The current focus on national enrollment numbers and signups by young adults doesn’t tell us a great deal about the answers to these questions,” writes Mr. Altman, who is president of the Kaiser Family Foundation, a nonprofit research group.

So far, the trend lines on those three questions could be summarized as follows:

• On Obamacare’s central stated goal of reducing the number of uninsured Americans, the law is having an impact but maybe not as fast as hoped. This includes both people newly insured via Medicaid and through sign-ups on the Obamacare exchanges.

• Prices on the exchanges are a mix of affordable and steep – depending in part on the size of subsidies that the law provides based on income and family size. (See “How much will enrolling cost me?”) Some forecasters see insurance premiums rising in 2015. The costlier it gets, the greater the risk that people won’t follow the Obama slogan of “get covered.” Because pricing and enrollment trends vary by locale, the law may show success in some states and not in others.

• On the third question, how well Obamacare serves consumers, it’s too early to have data from exchange users. What can be said is that Americans generally give their health-care system strong marks, but a good many fret that the quality of care will go down under the Affordable Care Act.

Some 45 percent of Americans, in a Kaiser poll a year ago, saw the reform law making the quality of US health care worse, while 24 percent thought quality would improve under the law. The exchanges offer generally strong insurance coverage, but a common consumer worry is that the choice of doctors is narrowing.

The thread that runs through this all is that the law’s aim – to extend the umbrella of insurance coverage over millions more Americans – is hard to achieve unless costs can also be tamed. Otherwise, people are put in an untenable situation of being asked to buy something they can’t afford, or to help pay for something as taxpayers that’s running out of control.

Supporters of Obamacare point to a slowdown in medical inflation in recent years as a promising sign that upward cost pressure can be contained, and they credit the law as part of the reason. But many health experts say the Affordable Care Act doesn’t do enough to curb the cycle of rising prices.

“The ACA did little to limit the cost increases [that] providers, drug companies and durable medical equipment vendors pass through,” Brett Heineman, an actuary specializing in health care, said last fall in The Actuary magazine. “This will come to a head sometime between 2015 and 2017.”

Although the effects of Obamacare could play out over several years, this doesn’t mean the initial enrollment numbers are meaningless. They’re a current barometer of popular response.

The milestone of 6 million enrollees on the exchanges, which the Obama administration announced a few days before the March 31 sign-up deadline, represents a significant comeback after last fall's botched launch of HealthCare.gov.

The nonpartisan Congressional Budget Office (CBO) predicted at first that 2014 enrollment on the exchanges would reach 7 million, but then scaled its forecast back to 6 million after the exchanges’ troubled launch.

Now, as the tally exceeds 6 million, it’s helpful to be a bit cautious about the numbers. Some insurance experts warn that the figures will eventually get adjusted downward for people who fail to pay premiums or were double-counted because of the software problems.

And don’t assume that all the enrollees are people who were previously uninsured. The total includes lots of people who had individual coverage before and have been drawn into the new marketplaces.

One survey by the consulting firm McKinsey found in February that only about 1 in 4 enrollees came from the ranks of the uninsured. If true, that ratio undershoots the CBO estimate that about two-thirds of enrollees would have no prior insurance.

Still, the law appears to be reducing the number of uninsured Americans through its expansion of Medicaid and the launch of the exchanges.

Gallup polling early this year found that 15.9 percent of Americans say they’re uninsured, down from 18 percent in the middle of last year. But it's hard to know how much the poll results are due to Obamacare versus other factors like falling unemployment. Moreover, the share who are uninsured should fall further still if the law were to match the CBO forecast of 13 million people becoming newly covered in 2014.

To be sure, the share of enrollees who are young is important to Obamacare’s success. That’s because insurers want a customer pool that includes plenty of low-cost (often young) people alongside those who use more medical services.

In recent months, about 1 in 4 enrollees has been from the under-35 crowd, lower than the 40 percent share the Obama administration was hoping for. But not all young people are cheap to insure. The age mix is really a just a proxy for a more complicated issue: As insurance companies prepare to set their premiums for next year, their decisions will be influenced by whether their 2014 pool of customers is costing more than expected.

Critics of Obamacare argue that the law could flame out in a so-called death spiral, as exchanges appeal disproportionately to less-healthy people, driving up the cost of insurance and making it less likely that more-healthy potential customers also sign up.

So stay tuned for news about those 2015 premiums. Some insurance experts warn of double-digit rate hikes within the state marketplaces. Others expect more-modest changes in premiums, in part because insurers may be focused on attracting customers during the law’s early phase.