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Wednesday
Feb122014

Young People And That First Premium: Why The ObamaCare Risk Pool Is Worse Than You Think

With the the Dept. of Health and Human Services set to release the next enrollment report on the ObamaCare exchanges this afternoon, I can’t help but wonder if this will be the report in which we finally get some data on how many people have not yet paid their first premium.  I doubt it.  But it would sure be nice since it would give us another key piece in the risk-pool puzzle.

If the nonpayment rate is high, say 20%, then it’s a very good bet that the exchange risk pool is in even worse shape that previously thought.  The reason is that younger people are more likely that older people to be delinquent on their payments.  For example, here are some numbers on age and credit score from BCSAlliance:

Since credit score is heavily reliant on payment history, the above scores suggest that the young have the worst record at making payments on time or making them at all.  From there it is a small leap to the proposition that the bulk of people who have not paid their first premium on the ObamaCare exchanges are in that crucial 18-34 age group.  

If the nonpayment rate is high, then the number of 18-34-year-olds who are part of the exchange risk pool is surely worse than the 24% claimed by the last HHS enrollment report.  It’s also much further from the 38% the Obama Administration predicts it needs to keep the exchange risk pool stable.

Media reports show that the rate of nonpayment runs the gamut:

-An article from mid-January in the Wall Street Journal shows various insurers with nonpayment rates ranging from 20% to 40%. 

-A more recent article in CNNMoney, insurers report a range of customers who haven’t yet paid, from 12% to 30%.  Perhaps most worrisome for ObamaCare supporters is insurer Wellpoint, who has signed up 500,000 on the exchanges.  Yet, “a majority of WellPoint’s would-be members have paid, said WellPoint’s chief financial officer, but not a ‘vast majority.’”

-As of early January, only 8% of those who had signed up for an Anthem Blue Cross and Blue Shield plan via the Connecticut exchange had paid their first premium.

-A Newsweek article examining the Vermont exchange shows that about 37,000 had signed up for a private plan but only 11,943 had actually paid their first premium.  That’s a non-payment rate of 68%. 

-Breitbart reported in late January that 25% of those “enrolled” in Covered California had not paid their first premium.

It would be wonderful if HHS not only released the nonpayment rate but also broke it down by age.  Unfortunately, if the first is unlikely, the latter would be a miracle.

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