One of the interesting problems with health exchanges is how do we measure success? Although the chaos and confusion the health exchanges experienced yesterday was amusing, it is likely to be temporary and not a good indicator of the success or failure of the exchange. So let us go look at some of the customers who tried to use the exchanges yesterday and why.
- Preexisting Conditions — Obviously there were some people yesterday with pre-existing conditions who were more than willing to put up with a lot of hassles to get insurance from the health exchanges. Hopefully their new policies will reduce their out of pocket health care costs. From an insurance company standpoint these are the customers you dread. There is probably 99.9% chance that the insurance company will lose money on these customers but that is the big idea from the Affordable Care Act.
- Checking out the Prices — That was me yesterday. I have an affordable, grandfathered plan that I am more than willing to stick with if it continues to be less expensive than plans on the exchange. Since I have not filed a claim in four years, insurance companies would probably refer to me as the “perfect” customer. I should be a customer that an insurance company selling on the exchange would like to poach.
- Young, Healthy, and Uninsured — These young, healthy, and uninsured people are being asked to subsidize the customers who were uninsured because of preexisting conditions and to lesser extent the elderly. These are the people the insurance companies need to sign up but some preliminary search numbers indicated that they were using the site to figure out how they can avoid paying the penalty.
Between now and the end of the year the insurance companies probably expect to sign up a lot of people with preexisting conditions and a few young, healthy, uninsured customers. This is the expected result. This conclusion is based on the presumption that it is unlikely that a large group of young, healthy, uninsured who were unwilling to purchase health insurance when it cost over 50% less will be enthusiastic to sign up before they have to. The earliest they probably want to start playing the health insurance game is January 1st. So the key to success for health exchanges boils down to how many of these young people sign up in the open enrollment period between January 1st and March 31st. After March 31st we can probably assume that these young people are committed to paying the $95 penalty or that they have found an excuse for not paying the penalty.
Measuring the success of the health exchanges should be pretty easy after March 31st. At this time the insurance companies will probably know the actual number of customers with preexisting conditions in the exchanges compared to the number of young people who will be supporting them. Maybe we will get lucky and find that in our state there are less people with preexisting conditions. Maybe we will get lucky and find that there are a lot of young, health, uninsured people who have the extra cash to pay the subsidized premium and are willing to overlook the fact that they are disproportionately supporting the health care for people with preexisting conditions. My guess is that we have plenty of people with preexisting conditions and that these young people will either find exemptions for not buying health insurance or are willing to pay the penalty 2015. This “least cost decision” follows the profile they established in the battle to get this group to pay for their illegally downloaded music and videos. If the young, healthy enrollment numbers do not meet expectations, then this would be the time when I expect the insurance companies and Affordable Care Act supporters to start panicking and a new round of chaos and confusion with the Affordable Care Act will begin.