2018 MIDTERM ELECTION

Time: D H M S

Two glaring errors in the WSJ anti-Obamacare editorial

Todays' Wall Street Journal featured an editorial (I assume it's from the entire WSJ board, as there's no author listed) trashing the Affordable Care Act, entitled The Decline of ObamaCare: Fewer enrollees and rising loss ratios will force a rewrite in 2017.

Chock-full of negative spin, it's trashing the ACA for the following:

  • Lower than expected private policy enrollments (ie, exchange QHPs)
  • Not enough young people to keep the risk pool in check
  • Problems with the premiums and/or deductibles making exchange QHPs too expensive
  • the Medical Loss Ratio for 2014 being way too high (ie, some insurers losing money last year)

Now, all four of these attacks are partially valid. Yes, enrollment in private Qualified Health Plans via the ACA exchanges is definitely below expectations. Yes, the risk pool is skewing older than expected. Yes, (full price) premiums (to some degree) and (full price) deductibles (definitely) are a serious issue this year. And yes, some insurers did take a bath and even go belly up due to the first-year premium "blind dart throwing" (especially 9 ill-fated CO-OPs, along with at least one private insurer in Wyoming).

I'm not going to criticize the WSJ for several of their attacks; some are valid and some are outside my area of expertise. HOWEVER, I've found a couple of serious problems with the piece regarding the first bullet point.

First up:

This month the Health and Human Services Department dramatically discounted its internal estimate of how many people will join the state insurance exchanges in 2016. There are about 9.1 million enrollees today, and the consensus estimate—by the Congressional Budget Office, the Medicare actuary and independent analysts like Rand Corp.—was that participation would surge to some 20 million. But HHS now expects enrollment to grow to between merely 9.4 million and 11.4 million.

First of all, no, HHS did not say that "there are about 9.1 million enrollees today". The most recent official number of effectuated exchange enrollees, as of June 30, was 9.95 million. What HHS said was that they expect there to be about 9.1 million people still enrolled as of the end of December...and that of those they expect between 7.3 - 8.8 million to renew their policies, plus another 3.7 - 5.4 million new folks to join up. They do, however, expect to have between 9.4 - 11.4 million still enrolled at the end of next year.

As an aside, I personally think that HHS is lowballing the number of end-of-2015 enrollees; the limited data I have from 8 states suggests that as of the end of September, at least, effectuated exchange QHPs may have actually increased slightly since June (or at least only dropped slightly). I could be wrong about this, of course, and even if I'm correct, that doesn't necessarily mean that any more of them will renew their policies, but it's a positive sign. I also, of course, have made a personal projection of end-of-2016 enrollments being somewhat higher than HHS (around 12.2 million vs. their 9.4 - 11.4 million), but that's just my take, not an official source.

As for the "20 million" expected to participate, as both HHS and I have noted, a good 5 million of that comes from people who were expected to be shifted from ESI coverage over to the exchanges (one of the things ACA critics have been whining about for years) who, instead, are likely to keep their ESI coverage. Keeping ESI is supposed to be a good thing.

The second issue is more concerning:

Recruitment for 2015 is roughly 70% of the original projection, but ObamaCare will be running at less than half its goal in 2016. HHS believes some 19 million Americans earn too much for Medicaid but qualify for ObamaCare subsidies and haven’t signed up. Some 8.5 million of that 19 million purchase off-exchange private coverage with their own money, while the other 10.5 million are still uninsured. In other words, for every person who’s allowed to join and has, two people haven’t.

Um...what? If I'm understanding this last sentence correctly, the editorial board of the Wall Street Journal is claiming the following:

  • There are a total of around 28 million people eligible to enroll in the exchanges
  • Around 9.1 million (actually 10 million) are enrolled via the exchanges
  • Around 8.5 million are enrolled off-exchange
  • Around 10.5 million are uninsured
  • Therefore (according to the WSJ), that means that "two people haven't joined" for "every person who's allowed to join and has".

The Wall Street Journal has made a fundamental error here. They don't seem to understand that most of the 8.5 million people enrolled in off-exchange private policies are part of the same risk pool as the exchange-based enrollees. Setting aside a couple million "transitional" and "grandfathered" policy enrollees, the other 5-6 million (guestimate) are treated just like exchange-based enrollees for purposes of risk pools. The only reason most of those folks haven't signed up via the exchanges is because they make more than 400% FPL and therefore don't qualify for federal tax credits.

In a way, this is the exact same point I kept trying to hammer into Avik Roy's head a year and a half ago, and which he never acknowledged even though I was later proven to be absolutely correct about it just a few months later.

Don't get me wrong: The ACA-compliant risk pool does need to expand and diversify with more young people this year and next in order to keep premiums/deductibles from spiraling out of control. However, the WSJ should've known better than to mess up either of these points. Whether this was done by mistake or on purpose I'll leave to others to decide.

UPDATE: Much more on this from Andrew Sprung.