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Is Obamacare Now Beyond Repeal?

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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A few days ago, I said that the number of plan selections on the insurance exchanges set up under the Affordable Care Act looked likely to come close to the Congressional Budget Office's projection for total enrollments.

That now seems pessimistic; the administration reported yesterday that 6 million people had selected plans on the exchanges. Since they say that enrollments were running at 100,000 a day earlier in the week, it now looks very likely that total plan selections will reach at least 6.4 million by the time open enrollment closes.

The accompanying chart shows how the numbers could look, depending on whether enrollments stay around 100,000 per day, or accelerate. (Yes, I'm assuming that they won't fall. I'm also assuming that we actually hit 6 million on March 26, rather than yesterday. If either of those assumptions is wrong, then the number of plans selected will actually be somewhat lower.)

Naturally, a lot of people on Twitter were saying that we had already reached the CBO projection, several days early.

Not quite. The CBO projected that 6 million people would have insurance coverage through the federal exchange this year. But as we've discussed, some people haven't paid premiums -- the estimates of attrition rates have been running from about 10 percent to 20 percent.

Of course, those estimates mostly came in January, when people finally started paying premiums. And it seems reasonable to assume that attrition was especially bad in January, because people who had trouble may have set up two or three accounts, but only paid the premium on one. On the other hand, industry expert Bob Laszewski says he was hearing of an additional 2 percent to 5 percent attrition rate in the second month, as people who had originally purchased insurance stopped paying. So I don't think we have a good idea what the attrition rate will be -- north of 5 percent, almost certainly, but it's hard to say exactly how far north.

My second chart here shows what actual enrollment would look like, depending on how many plans are ultimately selected and how bad the attrition rate is over the first few months of operations. As you can see, it ends up below the CBO's projection in most cases, sometimes far below. But if signups accelerate significantly, and attrition is minimal, the exchanges may hit the CBO number. Especially when you take into account the de facto extension of open enrollment at least into April.

Does that mean that Obamacare will basically be beyond repeal, as its supporters hope? It certainly makes things harder. But we still don't know how many of these people are newly insured, or how many of the previously insured like these policies better than their old policies -- nor how much pressure it is going to end up putting on the budget. Those are things we won't know for quite a while. But if it were impossible to ever cut off an expensive entitlement that goes to the middle class, TennCare would never have been cut.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

(Megan McArdle writes about economics, business and public policy for Bloomberg View. Follow her on Twitter at @asymmetricinfo.)

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Megan McArdle at

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