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Little Optimism About Latest Young-Invincible Push

HFMA Weekly News: September 28, 2016

Sept. 28—First came the celebrity-backed social media campaign, then messages about health insurance enrollment being a social responsibility, then campaigns to encourage peers and parents to put pressure on the uninsured. Those were the various federal enrollment efforts targeting young adults in just the first operating year of the government-run health insurance marketplaces.

Almost three years later, the share of adults ages 18 to 34 enrolling for coverage in the Affordable Care Act (ACA) marketplaces has remained stuck at 28 percent of enrollees, according to data from the U.S. Department of Health and Human Services. That’s far short of the 40 percent potential share that was estimated in a Kaiser Family Foundation report.

“If enrollment among young adults falls short, then the total amount of premiums collected by insurers will be less than the total health care expenses of enrollees plus administrative overhead and profit,” the report stated.

And that’s what many insurers have said has happened, with some companies reporting losses of hundreds of millions of dollars from their ACA plans.

This year, the Obama administration is betting on a turnaround through the use of letters from the Internal Revenue Service (IRS), outreach to gamers, improvements to the marketplaces’ mobile device interface, and restrictions on enrollees’ opportunities to game the system.

The complex carrot-and-stick effort to enroll young adults includes a social media outreach campaign under the hashtag HealthyAdulting (not to be confused with previous enrollment hashtag yoenroll). Many of the initiatives were announced Sept. 27 at a White House summit.

The “stick” component of this year’s effort to snag so-called young invincibles was launched earlier in the year and included stern letters from the IRS, efforts to limit the use of short-term coverage, and a tightening of enrollment eligibility outside of the open-enrollment season.

Industry observers were dubious that the latest carrots would have much impact when surveys indicate the primary obstacle remains the price of the plans.

“Until they can deal with the price, they are not going to make a huge dent in the market,” Jon Gabel, a senior fellow with NORC at the University of Chicago, said in an interview.

Where It’s Working

But young invincibles have enrolled in higher numbers in some locations.

Officials for Covered California, where young invincibles comprise 38 percent of total enrollment, credited the program’s success to efforts to increase the affordability of plans as well as targeted outreach. However, some worried those gains could be endangered this year after the state approved premium increases that will average 13.2 percent in 2017, or more than three times the increase of the last two years.

Two of the state’s biggest insurers—Blue Shield of California and Anthem Inc., which cover 50 percent of the market—asked for the biggest hikes. Blue Shield’s premiums jumped by an average of more than 19 percent, according to published reports, while Anthem’s increased by more than 16 percent.

Such premium-driven concerns are being fueled nationwide, with ACA plan premiums expected to jump in part due to the end of two of the law’s rate stabilization programs. The average premium hike requested for 2017 across all 50 states and the District of Columbia was 23.3 percent, according to tabulations by, which supports the law. Actual nationwide rates will be finalized over the next several weeks.

Many potential enrollees are eligible for large cost-sharing subsidies and would not see much impact from the rate hikes, Gabel said.

“But some will hear rates are going up and will be less inclined to look into what their actual rates are,” Gabel said. Another exception to the generally low enrollment of young invincibles is Washington, D.C., where the youthful demographic comprised 40 percent of total enrollment this year. Mila Kofman, executive director of the Health Benefit Exchange Authority of the District of Columbia, which operates the D.C. marketplace, said in an earlier interview that innovative marketing and outreach efforts were at least partially to thank for the marketplace’s success in attracting young invincibles.

Some of the health insurers that have had the best financial results in the ACA marketplaces also have been praised for their successful efforts to enroll young people. For instance, Molina Health, Centene, Florida Blue, and Kaiser all have profited more than most insurers from their ACA plans, despite low premiums.

Some large insurers, like Florida Blue, performed better actuarial analyses to set appropriate rates right from the beginning, said Dudley Morris, senior advisor at BDC Advisors.“I don’t know why Aetna and others that also had access to historical data for those markets didn’t do better,” Morris said in an interview.

Medicaid insurers Molina and Centene likely were able to convert many young Medicaid enrollees to their ACA plans as the enrollees’ incomes rose and disqualified them from Medicaid coverage, Morris said.

The success of traditional Medicaid insurers also likely stemmed from their low premiums and cost-control designs, which steered patients to low-cost sites of care, said Edmund Haislmaier, a senior research fellow at The Heritage Foundation. For instance, many such plans paired narrow networks with nominal copays for primary care and large out-of-pocket costs for emergency department care.

“These plans seem to be doing fine,” Haislmaier said in an interview.

Plan design and price setting are foundational to ACA success, according to Robert Laszewski, president of Health Policy and Strategy Associates.

“The key to other insurers being successful is to have health plans that people who earn more are willing to buy,” Laszewski said in emailed comments.

The downside of the subsidies is that insurers generally have been unable to garner many enrollments among populations for which the subsidies taper off or disappear. The insurance industry standard is to enroll 75 percent of an eligible group, Laszewski said. But ACA plans in 2016 were able to enroll only 26 percent of people with incomes of 251 percent to 300 percent of the federal poverty level (FPL) and 2 percent of those over 400 percent of the FPL, according to Avalere data.

“Obamacare will not work until we see penetration rates approaching 75 percent in the other income categories,” Laszewski said. “This is another way of explaining why just getting the youngest won’t do enough.”

Changes Needed

Among the changes that are needed to spur more participation is a larger individual mandate penalty, some advisors said. A steadily rising penalty for those who failed to purchase qualifying coverage in accordance with the ACA’s individual mandate will max out this year—it will increase only by the rate of inflation going forward.

But due to the unpopularity of the mandate, any legislation to increase it would likely need to wait until after the presidential election, Gabel said.

Insurers also have pushed for a change to the age rating that would allow plans to charge older enrollees five times as much as younger enrollees, instead of the current limit of three times as much.


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