(Bloomberg) — About 70 percent of Obamacare’s customers are 35 years of age or older, indicating that U.S. health care overhaul is initially attracting a less healthy population that may drive up insurance premiums.
The federal- and state-run insurance exchanges signed up 2.2 million people for private health plans in the three months ended Dec. 28, the U.S. Department of Health and Human Services said in a report released Monday. About 24 percent were 18- to 34-year-olds, and about one-third were 55 or older.
The Obama administration wanted 18- to 34-year-olds to make up about 40 percent of total enrollment to help offset the cost of care for older and sicker people. Missing the target for the “young invincibles” may lead insurers to adjust prices if gains aren’t made by the March 31 end of enrollment.
“It is more of a scale than a cliff,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s lobbying group in Washington. “The more young, healthy people participate, the more stable the marketplace will be and the more affordable premiums will be.”
The report today marks the first time the U.S. has released the demographics of customers on the exchanges that debuted Oct. 1 under the 2010 Patient Protection and Affordable Care Act, known as Obamacare. The patient-mix is important to health insurers who would have to decide by the end of May whether they want to keep selling exchange plans in 2015.
Humana said last week it was evaluating its expectations for Obamacare after the initial wave of customers appeared to be sicker and costlier than anticipated.
“We’re confident based on the results we have that we’ll have an appropriate mix enrolled in coverage,” Mike Hash, the director of HHS’s Office of Health Reform, said on a conference call. Young adults should enroll in greater numbers as the March 31 deadline approaches, he said.
Congressional analysts had projected the government-run insurance markets would attract about 7 million people in the initial six-month enrollment period. To keep the system financially stable, the White House had said it needs about 2.7 million of the new enrollees to be young, healthy customers.
The market can still “self-correct” to an extent if many more older people enroll than young people, said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a Menlo Park, Calif.-based nonprofit that studies health policy. Insurers are allowed to charge older people as much as three times the premium for their youngest customers. That limits the amount premiums would have to rise for younger people.
“If insurers could charge unlimited age rates they’d probably vary premiums by a factor of about 5 to 1,” Levitt said in a telephone interview. “Premiums vary by age; they just don’t vary quite enough to make up the difference in cost between younger people and older people.”
Kaiser had estimated that about 40 percent of potential exchange customers would be from 18 to 34, which aligns with the Obama administration projections. Premiums may increase by about 2.4 percent next year if only 25 percent of customers come from that age range, Levitt said.
“That assumes that insurers assumed a disproportionate mix of enrollees as they set premiums” for 2014, Levitt said. “It’s likely many insurers made the assumption that the risk pool would be older than the potential market.”
From Oct. 1 through Dec. 28, about 1.2 million people enrolled in private plans using the federal exchange, which covers 36 states including Texas, Florida, Illinois and Ohio, according to the report. About 957,000 signed up in states that run their own exchanges, including California, which alone enrolled almost 500,000.
Florida saw 158,030 people enroll and New York state, which runs its own exchange, 156,902.
The demographics of people signing up for coverage varied from state to state. In West Virginia and Arizona, 17 percent were 18 to 34, while in Washington, D.C., 44 percent of exchange customers were in that age range.
Nationwide, about 54 percent of people in exchange plans were female. The administration plans to “focus on reaching young adults and in particular young males” in its efforts through March, Julie Bataille, a spokeswoman for the Centers for Medicare and Medicaid Services, said on the conference call.
In addition to the 2.2 million people who signed up for private health plans, about 1.6 million people who sought coverage in exchanges were determined to be eligible for Medicaid, the state-run program for low-income people, or state children’s health plans, according to the report. Federal officials said they didn’t know how many of those people were made newly eligible for Medicaid by the health law and how many were already eligible for the program.
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