ACA Enrollment Numbers Are Mostly Smoke and Mirrors

The Obama administration has made a big deal out of 7 million people signing up for insurance through Affordable Care Act (ACA) exchanges. By emphasizing only the gross number of enrollees, ACA supporters are attempting to deflect attention from early reports not painting a very favorable picture of the program's success.

A deeper look at the composition of the numbers, by a highly respected player in health care policy and economics analysis, shows that the real outcome of the ACA's major goal—reducing the number of uninsured Americans—has been a failure, so far.

Recently, analysts at the RAND corporation estimated there has been “a net gain of 9.3 million in the number of American adults with health insurance coverage from September 2013 to mid-March 2014.” They based this estimate on data from a survey fielded by the RAND American Life Panel, drawn from a small, but nationally representative, sample that includes all people who gained healthcare insurance—not just those who used ACA state or federal exchanges.

According to the RAND analysts, out of 40.7 million previously uninsured people, 14.5 million gained coverage during the timeframe of the survey, but 5.2 million previously insured people lost coverage due to several reasons (including policies being canceled because they failed to meet minimum requirements established under Obamacare), for a net gain of approximately 9.3 million.

The increase in the number of people with health insurance is due to several factors, including gains in the number of people with employer-sponsored health coverage (RAND says enrollment in employer-sponsored insurance increased by more than 8 million) and gains in the number of people who receive Medicaid (which increased by nearly 6 million). This is offset by drops (more than 7 million) in the numbers of people who receive insurance through Medicare, the military, and other government programs.

Although the administration and its supporters have been loudly touting the number of sign-ups through the exchanges, only one number matters: the number of previously uninsured people who actually gained coverage through the exchanges. In large part, the public perception of the success or failure of the ACA hinges on whether the program can be seen to have overcome its initial failures to provide viable insurance options for people previously unable to purchase individual insurance on the open market.

When looking at that number, the RAND report doesn’t look so good. The data indicate that out of 3.9 million people enrolled in the exchanges (according to RAND), “only 1.4 million of these individuals were previously uninsured,” or roughly 36%.

This is in line with an earlier survey of consumers “eligible to purchase individual coverage during the open enrollment period (either on or off the exchanges),” conducted in February by McKinsey & Company, that put the percentage of previously uninsured even lower, reporting that only 27% of people who reported having enrolled for new insurance in 2014 were previously uninsured.

Granted, the RAND survey is small (roughly 2,400 adults between the ages of 18 and 64), with an ample margin of error; RAND states that the margin of error for its estimate of 9.3 million newly insured individuals is +/- 3.5 million. The margin of error for the estimate of 1.4 million previously uninsured people who purchased coverage through the exchanges is +/- 700,000.

Still, what to make of these numbers? As Avik Roy points out at Forbes, the RAND report shows that “outside of employer-sponsored insurance, Obamacare’s impact on the uninsured has been minimal thus far—a net of 1.1 million between Medicaid (+5.9 million), the exchanges (+3.9 million), off-exchange individually-purchased insurance (-1.6 million), and other forms of insurance, such as coverage for federal employees and the military (-7.1 million).”

The Obama administration has launched the most massive government intrusion into the health care sector since Medicare, botched the rollout of the exchanges, arbitrarily changed key components of the mandates and other parts of the law, and deflected concerns over the long-term effects on insurance premium increases all so barely more than 1 million people can get insurance thanks to the ACA. (Remember, of the estimated 9.3 million net gain, more than 8 million is due to employer-provided coverage.) This is cause for celebration? As Michael Gerson wrote in the Washington Post, the Obama administration has attempted to replace our current patchwork heathcare model with “a cumbersome system that covers relatively few of the uninsured at a high social and economic cost.”

As the true numbers on enrollment and coverage through the ACA are revealed, it is clear that the administration has overpromised and underdelivered. Yet it is, in the words of Gerson, “pausing to bow at mile two of a marathon.” With experts warning of double-digit increases in insurance premiums in 2015 because of the ACA, it is more imperative than ever that we replace this bloated failure with a rational, market-driven alternative that gives the American public good value for its hard-earned money while actually working to reduce the number of uninsured people.