Updating the "How many have PAID???" Formula

OK, I've proven time and time again that overall, roughly 90% of ACA exchange QHP enrollees do eventually pay their first month's premiums, although it may take a bit longer for some of them to do so. The problem with the exchanges (or individual insurance companies, or the state insurance commissioners or whomever) releasing a flat "XX% have paid as of such-and-such date" is that it's misleading, since anyone who has enrolled within the past 2 weeks likely won't have their policy actually start for up to a month or longer, and even those who enrolled more than 2 weeks ago may just be starting their coverage now. In other words, it's a rolling average, which increases as time goes on for the earlier enrollees, but drops as time goes on for the newest enrollees.

The Vermont update which I just published is a perfect demonstration of this. As of July 22nd:

  • Out of the 32.7K enrollees whose coverage started between January 1st and May 1st, 95% eventually paid
  • Out of the 1,091 enrollees whose coverage started on June 1st, 83% have paid so far
  • Out of the 1,359 enrollees whose coverage started on July 1st, 49% have paid so far
  • Out of the 517 enrollees whose coverage will start on August 1st, 35% have paid so far

What you have to remember is that there's anywhere between a 2 to 6 week gap between when you enroll in a policy and when the policy becomes effective. Anyone who enrolled between April 16 - May 15 started coverage on June 1st; anyone who enrolled between May 16 - June 15 started on July 1st and so on.

Since people have a tendency to hold off until the last minute before paying bills (understandable, especially when that bill could be several hundred dollars per month), this means that the payment rate will ebb & flow as time passes.

With this in mind, I'm modifying my formula for calculating how many of the current total have paid up as of this moment as follows:

  • Those who enrolled as recently as 3 months ago: Appx. 90%
  • Those who enrolled between 2-3 months ago: Appx. 85%
  • Those who enrolled between 1-2 months ago: Appx. 50%
  • Those who enrolled between 0-1 month ago: Appx. 35%

This isn't an exact formula, of course; I'm doing some rounding, and obviously someone who enrolled this morning or yesterday likely hasn't even received their invoice yet much less had a chance to make a payment, but it should be close enough to use as a general rule of thumb.

Based on this, I get the following:

  • Out of 8.02 million who enrolled between 10/1/13 - 4/19/14, appx. 7.22 million have paid
  • Out of appx. 234K who enrolled between 4/20/14 - 5/15/14, appx. 199K have paid
  • Out of appx. 279K who enrolled between 5/16/14 - 6/15/14, appx. 140K have paid
  • Out of appx. 405K who enrolled between 6/16/14 - Today, appx. 142K have paid

This gives a total of around 7.7 million paid QHPs to date out of around 8.9 million total QHP enrollees, or around 86% overall.

This also explains why everyone else's estimates of "how many have paid" estimates have tended to sit at around 85%...because the data this is based on is almost invariably either a month or more out of date or mixes in the more recent enrollees (whose policies haven't kicked in and/or who may not have even received an invioice yet) with those whose coverage started already.

However, as I've shown many times, that percentage will still continue to climb slowly until it hits right around 90%...of the current total.

In fact, revisiting the states which have posted hard "Paid" numbers (see the spreadsheet for direct source links), we get:

  • AL: 82% of 97.9K (as of 5/08)
  • AR: 90% of 44.7K (as of 7/22)
  • CA: 85% of 1.405M (as of 4/21)
  • CT: 100% of 79.2K (as of 5/22)
  • ME: 90% of 44.3K (as of 5/08)
  • MA: 100% of 33.5K (as of 5/01)
  • MI: 90% of 272.5K (as of 7/14)
  • MN: 95% of 52.9K (as of 7/29)
  • NV: 76% of 47.2K (as of 5/28)
  • NC: 85% of 357.6K (as of 5/10)
  • ND: 94% of 10.6K (as of 7/29)
  • OR: 86% of 96.0K (as of 7/29)
  • RI: 91% of 28.5K (as of 5/03)
  • SC: 71% of 119.8K (as of 5/07)
  • VT: 87% of 38.0K (as of 7/22)
  • WA: 100% of 166.6K (as of 5/27)
  • WV: 94% of 25.9K (as of 7/13)
  • WY: 92% of 12.0K (as of 5/20)

Add all of these up and you get a total of out of 2.542 million out of 2.932 million, or 87%...and again, take a look at how out of date most of those numbers are (especially California, which makes up almost half of the total, yet hasn't been updated since April 21st...a solid 9 days before hundreds of thosuands of their policies even started coverage!).

Once again, I'm quite confident that the true eventual number is around 90%.