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Obamacare Enrollees Are Paying Premiums. We Think.

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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We know that 8 million people have enrolled in Obamacare. But how many of them have actually paid their premiums? The Barack Obama administration has been curiously silent on this point. By now, it must have the data, but for some reason, it chose not to issue it.

Until now. Apparently, Marilyn Tavenner, the head of the Centers for Medicare & Medicaid Services, just told Congress that 7.3 million people have paid premiums and are currently enrolled in exchange policies. What does that mean?

It's a little hard to tell, because according to Jason Millman of the Washington Post, she also says that this is a "snapshot" of Aug. 15, not a cumulative figure. Why does that matter? Because there's a 90-day grace period between missing a premium payment and getting dropped from your insurance. The administration says that this figure only includes people who have "paid their premiums." But what does that mean? That they paid a premium at least once? Or that they are current on their premium payments?

Remember that out of 8 million total enrollments, almost 4 million people signed up in March and early April, most of them in those last few weeks (about 910,000 just in April). Those people didn't have their premiums due until May, or June 1. So someone who paid a single premium in May or June and then stopped paying would still be in the grace period, and they would technically still be covered by an exchange policy, pending payment. For that matter, if you started coverage in January and stopped paying six months later, you would still show up as enrolled in Tavenner's figure.

How much does this matter? It depends on the relative attrition rate: How many people stopped paying, and how many people never paid at all? If the latter accounts for almost all the attrition, then we can expect that 7.3 million is pretty close to the final figure for paid enrollment in 2014; I wouldn't expect it to fall much below 7 million, and it might be well over that figure. If the "stopped paying" group is substantial, then we can expect this number to grow substantially as policies written during the late-enrollment surge lapse.

All of which points to the need for better data on what's happening with the exchanges. The administration mysteriously stopped issuing enrollment reports as soon as open enrollment closed, leaving us to guess what's happening from insurer statements and partial data like this.

Frankly, I'm kind of surprised that this is the first time we've heard those numbers. They're pretty good. Oh, sure, they're not as good as the optimists hoped, but it's on the low end of estimates from industry expert Bob Laszewski, and certainly a lot better than the numbers we've been hearing from insurers. I expected them to be a lot worse, based somewhat on the insurer statements, but also because I figured the administration would have released them if they weren't really awful. Obviously, the administration would prefer to tout the 8 million enrollment figure, but it has still exceeded the enrollment projected by the Congressional Budget Office for 2014. Why not stand proud?

One thing to note is what this means for the future: The administration needs to nearly double this enrollment in order to reach the CBO's projection of 13 million exchange policies in 2015. How easy will that be?

I'm afraid I fall back on a standard answer when I write these columns: There's no way to know. Open enrollment will be much shorter this year, November to February, and won't be accompanied by the same sort of publicity blitz. It may get good word-of-mouth publicity, as people encourage friends and relatives to sign up. But you also won't have the same kind of pent-up demand. So we'll just have to see. Hopefully, by then, the administration will be able to offer us more complete data to work with.

  1. These numbers will evolve a bit in the next few months; more than 100,000 people stand to lose policies because they haven't provided documentation of their immigration status, and almost 300,000 more are slated to have their subsidies reduced. Some of those will probably decide to shed their policies when premiums go up.

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To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net