ACA Exchanges Appear To Be Morphing Into High Risk Pools

As I have said in the past unless health insurance exchanges changed their ways and started to offering affordable health insurance to the un-subsidized healthy people they were going to morph into high risk pools. It appears that Brian Blase and I agree on this matter. In a recent article posted on Forbes and the Mercatus Center he highlights some of the problems that are worth repeating, enrollees are poorer, enrollees are  older, and un-subsidized healthy people are not signing up.

Takeaway #2: Enrollees Skewing Much Poorer Than Expected 

The table below shows enrollment by income group in 2015 and 2016 contrasted to the Urban Institute’s projections of 2016 enrollment made in January 2015. The table shows that exchange enrollees are much poorer than Urban expected. Other groups, including CBO and Rand, also made large errors with this projection. For example, when the law passed, Rand projected that nearly half of exchange enrollees would be unsubsidized when the law was fully implemented.


As a healthy person who is exempt from the individual mandate because I cannot purchase health insurance from the exchange for less 8.05% of my salary, I have indicated that I will go without health insurance in 2017 because saving the equivalent of my 2016 insurance premium into a savings account gives me better bang for my healthcare buck than paying exorbitant premiums for insurance I will unlikely use when it has a $10,000 deductible. With the lowest cost 2016 bronze plan costing $1,025 a month, this is up 78% over my 2016 grandfathered plan and 229% over my 2011 premium of $311. Not surprisingly Brian says it differently but the result is the same.

Unless people receive extremely large subsidies or have very expensive health conditions, buying exchange plans generally makes them worse off than remaining uninsured. As a result, the exchanges appear to be morphing into high risk pools for people with income less than twice the FPL. Simply put, it now appears that there is a significant risk that the ACA, without major change, may lead to the destruction of the individual market for health insurance.