04/07/2014 08:37 pm ET | Updated Jun 07, 2014

Patiently Crunching Obamacare's Numbers

We are in the midst of a political battle over the Obamacare numbers right now, so it seemed like a good time to examine what they all mean, in an attempt to interject some clarity into a very confusing debate. The numbers will change over time, as will (no doubt) the claims made from both sides of the debate; but without a little context the numbers by themselves don't actually say much. And as time goes by, one particular number will become the most important of all the data -- and this number just got better today (more on this at the end).


Obama's big number

The first thing worth pointing out is that the big number everyone's currently arguing about -- the 7.1 million signups on the Obamacare exchanges -- is a tough number to put together, but it would have been even tougher to aggregate if Obamacare had worked as originally designed. One of the big complaints from the anti-Obamacare camp is that the signup numbers aren't complete (in various ways), and haven't been sufficiently broken down into subgroups for full analysis. This contradicts one of their own talking points about Obamacare (that it was a "big government takeover" of the health insurance marketplace), since the very reason the numbers aren't complete is that data must be accumulated from all the insurance companies participating in the exchanges. The Obamacare website doesn't measure who has yet paid for their insurance, for instance, because it is up to the insurance companies themselves to collect the money, and not the government. But the real irony is that the 7.1 million figure would have been a lot harder to add up (and would have taken much more time to release) if we currently had 50 state exchanges, as was intended by the law's authors.

The original plan was for each and every state to run their own exchange. But not many actually did -- most of them punted this responsibility to the federal government. This is why the federal Obamacare website got so big, after all. Because of this, however, it became a lot easier to compile data, because if all 50 states had separate exchanges some of them would have done a good job of collecting data and some would have done (to be polite) a not-so-good job. As it stands, we are still waiting for final data from some of the states with their own exchanges.

This is the first reason the 7.1 million figure is not exactly carved in stone -- it will change, as better data arrives. The second reason it will soon change is that President Obama left some wiggle room in the deadline for signups, until the middle of this month. Check the box that indicates "I tried to sign up previously" and you can still go onto the website and sign up for an insurance plan (no verification necessary). So there will be an adjustment upwards at some point during this month for that 7.1 million figure. After even this extended signup period is over, there will still be a trickle of people using the exchanges all year (until the next open enrollment period), since people will still be able to sign up for new insurance after life-changing events (moving from state to state, getting a new job, etc.). By the time next year's open enrollment period begins, the number is almost guaranteed to be different than the 7.1 million everyone is pointing to right now.

There are plenty of existing questions about the makeup of the 7.1 million, and so far no real hard data to answer these questions (which is why we're in a window of time where there's a lot of confusion out there). There is only one thing to advise, at this point: patience. The breakdowns will appear soon, one expects, as the numbers are fully crunched. Once again, these numbers are streaming in from the state exchanges which do exist, the national Obamacare website, and the insurance companies themselves.


Patiently breaking down Obama's number

The questions over Obama's main number are valid, and deserve answers. Because it is not just the total number of signups so far which is important, but also the mix of who has signed up. If the mix isn't right, the insurance companies will hike their premiums next year so much that the marketplace could enter what is known as a "death spiral." This would happen if most of the new people with insurance are sick and need lots of expensive care. This would result in rising premiums, which would drive away healthy people next year, making the pool of people insured even more sick and expensive, and the whole thing could thus spiral out of control. This is why there is so much attention paid to the question of how many young and healthy people have signed up.

So far, the insurance companies haven't begun to panic, at least from anecdotal evidence. The target for young people was initially set at 40 percent of new signups. The first few months that the Obamacare website actually worked (December, January, February), this number was low -- more like 24 or 25 percent. But young people are indeed known for waiting until the last minute, and the insurers have indicated that the last-minute surge had a large portion of young people within it (exactly what was expected, in fact), and is now somewhere in the range of 1-in-3 (still not 40 percent, but a lot better than 25 percent, to put it another way). But again, we'll have to wait a few weeks to see what this percentage actually turns out to be -- and whether it'll be high enough to avoid that death spiral. So far, as I said, the insurers don't seem to be panicking, yet.

The next big question is how many of the 7.1 million were previously insured. There is no solid data on this yet, although some estimates do exist. Part of figuring this number will hinge on what "previously insured" and "newly insured" mean to different people. If you had a job that ended halfway through 2013 (just for example), and then had no insurance for a few months, but were able to sign up on the exchanges, then were you "previously insured" or are you now "newly insured"? Or does "newly insured" only mean people who have never had health insurance in their lives? As you can see, there is a moving-target quality to sorting this data. The whole purpose of Obamacare was to provide affordable insurance so that America could reduce the number of uninsured people, so it is important to figure out who among the 7.1 million were just shuffled from one plan to another versus those who were able to sign up for insurance that wasn't previously available (or affordable) to them. Again, the only thing to advise here is "patience," until we get a better breakdown of the data.

More patience is needed for the number who signed up who have actually paid their first bill and now have (instead of just "have signed up for") health insurance. So far, most estimates have been putting this number in the 80-85 percent range (or, 15-20 percent who haven't paid yet). But there's a lag time built in to collecting this data, since it takes time to mail in a check and get a policy in the mail in return for a lot of folks. So we'll be able to see in roughly a month a much better number for how many have actually paid up. Patience, people, patience.


The number of cancellations

There are two further arguments over numbers -- one from each side of the debate -- which deserve mentioning here as well. From the anti-Obamacare side, their biggest argument has been deflated somewhat by the release of the 7.1 million figure. Their argument (before the 7.1 figure was announced) was, in essence: more people would be harmed by Obamacare than helped. This argument hinged on the number of people who received cancellation notices in the mail from their insurance companies. I've seen various figures used by people making this argument, from about 4.5 million to 5.4 million, and even up to 6 million.

The pro-Obamacare folks argue that this number (whatever it actually is) is misleading, for a number of reasons: it is in no way an official count, merely an estimate; it does not separate out insurance plans that were not acceptable to Obamacare's standards from insurance plans that were (a number of insurance plans are cancelled every year by insurance companies, which has been going on long before Obamacare arrived); and most of these estimates were made before taking into account the fact that Obama allowed for extensions when the initial stories appeared in the media. These are minor quibbles, though. The antis have a point, at the core of this argument: some people will indeed be harmed by Obamacare. This is a tough thing for the pro-Obamacare folks to admit, but it is indeed true. There are always winners and losers in any sweeping changes to such a large marketplace, and ignoring the losers and pretending they just don't exist weakens your overall argument. But the Obamacare supporters have a valid point here, too: you can't just compare the two numbers directly, and say something like: "6 million lost their insurance, 7.1 million signed up, therefore only 1.1 million were actually new signups." Of course, right up until the 7.1 million announcement, the antis were arguing that "more people lost insurance than gained it," but this talking point simply doesn't work for them anymore (since even a third-grader could tell you 7.1 is bigger than 6).

But Obamacare supporters have a bigger point about the people who got cancellation notices: just because they got a notice in the mail does not mean they are not now insured. This is the breakdown that the antis conveniently forget about in making their point. Because the group which did get cancellation notices now has choices that they didn't have last year. Some of the people who got such notices just signed up with their old insurance company again on a different plan, for instance. Importantly, these people are not counted in the 7.1 million. If they didn't use the exchanges and communicated directly with their private insurers, they are not counted at all in the total number of signups through the exchanges, to put this another way. Some of the people who received cancellations may have been newly eligible for Medicaid, which would also mean they are not counted in the 7.1 million. And quite a few of them were indeed able to go to the Obamacare exchanges and sign up for different insurance plans. What this all means is that even if the highest (6 million) figure is used, nobody has any idea how many of those people who were previously insured (in some fashion or another) are now uninsured. The antis try to equate the 6 million with people who "lost their insurance," but that doesn't mean the same thing as "are now not insured."

Of course, this doesn't take into account two major things: what type of insurance these people had before, and how much they are paying for insurance. Obamacare supporters like to write off these folks as "having substandard insurance," and state that therefore they are now getting better health insurance (or "Qualified Health Plans") for cheaper, but with no actual numbers to back this claim up. Anti-Obamacare folks like to state that these people are now "paying insanely higher premiums," but again, without offering anything more than anecdotal evidence to back such statements up. The only sure thing right now is that there were indeed losers in the grand shuffle of Obamacare, but we don't yet know how many or what categories they fall into.


In addition to the 7.1 million

But the pro-Obamacare people have a point to make of their own, outside of the 7.1 million. Because the 7.1 million number doesn't take into account a lot of other people who have been helped by Obamacare. There are a number of groups who are seeing more benefits under Obamacare, some of whom are pretty all-encompassing. For instance, all women are now not charged more than men for health insurance. Nobody faces lifetime caps anymore. Pre-existing conditions cannot be taken into account when purchasing health insurance. All seniors are seeing the "donut hole" in their Medicare prescription drug benefit shrink year by year, until it will disappear entirely. Everyone who has health insurance can now get preventative care for free, as well.

There are several other groups now getting even more direct benefits from Obamacare who are not counted in the 7.1 million number. People who are newly eligible for Medicaid, for instance (roughly 4 million of them, to date). This group could have been even larger (perhaps even doubled), it is worth pointing out, if all the states had opted in to the Medicare expansion. States run by Republicans have resisted this, meaning that millions of people are now denied Medicaid when just across the border in a neighboring state they would be eligible. Young adults who are still covered on their parents' insurance (which wouldn't have been possible without Obamacare) number around 3 million. Add just those two groups to the exchange signup figure, and you get 14 million people with health insurance directly due to Obamacare -- double the 7.1 million figure (although, again, the 3 million and 4 million numbers aren't very firm at this time and could become more accurate in the near future).


Today's good news -- a number really worth watching

Which brings us to our final point. The nationwide healthcare marketplace -- something like 16 or 17 percent of the total American economy, remember -- is always going to present a moving target. Absent a real "takeover" of the insurance marketplace by the government (such as "single payer," for instance), it is always going to be tough to exactly quantify how everyone is affected across the whole country at any given time. This confusion is going to give rise to people on both sides of the argument tossing estimates and anecdotes around with abandon, of course (it is, after all, an election year), as the politicians exploit the vagueness in the public mind of what's really going on.

But there is one measurement that more and more people are going to start paying attention to, especially after today's announcement of new data. This is the percentage of the American public which has no health insurance. When you examine the basic motivations behind the Obamacare law, there were two main problems which it tried to solve. The first was that nobody should go bankrupt to pay for health care if they are paying for health insurance. The second was that the rate of uninsured Americans is too high, and must come down somehow. The latter is the number that was just released today.

The Gallup organization polls intensively (using a much bigger data sample than a normal nationwide poll, with over 43,000 interviews) on this question. They just announced some good news today: the percent of uninsured Americans has now drastically dropped, to its lowest point since 2008. Since the Obamacare exchanges got up and running, this percentage has steadily gone down, from 18.0 percent in the third quarter of 2013 to 15.6 percent in the first quarter of this year. Take a look at the chart to see the magnitude of this drop. The analysis gets even better when individual months are examined: 16.2 percent in January, 15.6 percent in February, and 15.0 percent in March. Even within the month of March, the first half showed 15.5 percent, which fell to 14.5 percent by the end of the month. The trendline is pretty easy to see, in other words, and very good news for Obamacare fans.

My guess is that this is the number that will be closely watched, over time. The bickering about the 7.1 million signed up (or the 6 million cancellation notices) is going to fade, as both the public and the politicians step back to look at the bigger picture. Granted, the number is from a polling organization rather than official data from the government or the insurance companies, but it has the benefit of being one simple number which, over time, will show the success or failure of Obamacare to insure more Americans. And with such a massive sample (with a miniscule margin of error of only plus-or-minus 1 percent), it is a number that can be trusted much more than the average public opinion poll (which normally have error margins in the 3-to-5 percent range).

Obamacare supporters are cheering the good news today, as well they should. Such a sharp drop is hard to argue with, to put this another way. But much more work needs to be done. Even 14.5 percent is still way too high. Massachusetts (birthplace of Romneycare), after all, insures all but 2 or 3 percent of its citizens. That's a goal that Obamacare may never actually reach. Even softening this goal to something reasonable like only 5 percent uninsured, though, is going to take a lot more effort in the second and third year of the ongoing Obamacare rollout. Whether the program is successful at achieving anything like this goal still remains to be seen (Massachusetts didn't hit such fantastic numbers in its first year, either, it's worth pointing out). A lot of Americans won't find out what their fine is for not having health insurance until this time next year (when they do their 2014 taxes), which will be after the second open enrollment period ends -- so it is going to take a full three years to judge ultimate failure or success.

Which leads us back to our main point, throughout this article. We're all going to need to be patient for a while to see how well Obamacare works. That is going to be tough to do in the midst of an election where one party has dedicated its entire campaign effort into proving Obamacare is irredeemably broken, to be sure. For now, please just remember that we simply don't have enough data right now to answer all the questions being raised. Some of this data will appear in the next few weeks. Some will take months. But the final numbers won't really be in for years. Which is going to require a lot more patience on everyone's part.


[Full Disclosure: Although it has no bearing whatsoever on what I write, I am actually currently in a polling group for Gallup, which means that my own personal data is one tiny shred of whatever aggregate numbers Gallup comes up with for health insurance. To put it another way, I am one of the 43,562 adults in their survey. As I said, this does not influence my writing in any way; but to be absolutely scrupulous, I feel duty-bound to point it out, should anyone care.]


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