Fears that insurance exchanges that are the linchpin of President Barack Obama’s federal health care overhaul wouldn’t attract the young, healthy people needed to make them financially viable are being heightened by the early results of signups in several states.
If it becomes a trend, that could lead to increases in insurance premiums and deductibles next year. Along with the paltry enrollment numbers released this week, officials in a handful of states said those who had managed to sign up were generally older people with medical problems — those with the greatest incentives to get coverage.
It’s unclear whether that will persist. Young, healthy people might be more inclined to procrastinate, especially given doubts about the law’s technically flawed online signup system. They have until Dec. 15 to sign up if they want to be covered on Jan. 1.
Insurers have warned that they need a wide range of people signing up for coverage because premiums paid by adults in the younger and healthier group, between 18 and 35, are needed to offset the cost of carrying older and sicker customers who typically generate far more in medical bills than they contribute in premiums.
The first set of enrollment data revealed that 106,000 people signed up for coverage nationwide, far short of the 500,000 initial sign-ups the Obama administration had expected. In states where officials discussed more detailed information, it also became apparent that the people who flocked to the exchanges after they opened Oct. 1 were those who were desperate for coverage.
In California, most of those who applied were older people with health problems. In Kentucky, nearly 3 of 4 enrollees were over 35. And in Ohio, groups helping with enrollment described many of those coming to them as older residents who lost their jobs and health coverage during the recession.
“They have been putting off treatment for a long time, just praying they live until they turn 65 and qualify for Medicare,” said Lisa Hamler-Fugitt, executive director of the Ohio Association of Foodbanks, which received federal grant money to help people establish coverage.
In general, someone in his 60s uses $6 in health care services for every $1 tallied by someone in his 20s, said Nicole Kasabian Evans of the California Association of Health Plans. That makes younger adults a coveted group on industry balance sheets.
If those signing up trend to the elderly and sickly, “your insurance is going to cost more and that will discourage those younger people from coming in,” warned Lisa Folberg, a vice president with the California Medical Association.
The potential for rising monthly premiums and higher policy deductibles is just one deterrent to convincing young people to sign up for coverage on the exchanges. The technological problems that have plagued the federal exchange, which is running in 36 states, and many state-run online marketplaces also are slowing enrollment. And scattered reports of data breaches have the potential to scare off even more people.
Efforts to attract adults younger than 35, often referred to as “young invincibles,” include multimillion-dollar advertising campaigns, which have launched in several states.
If such efforts fail and insurance companies end up with too many sick or expensive customers, they might need to increase premiums or eventually leave markets to avoid taking heavy financial losses.
“It’s going to be very messy for the next couple of years, until we figure out who is buying insurance,” said Glenn Melnick, director of the Center for Health Financing, Policy and Management at the University of Southern California.
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