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Tuesday, January 21, 2014

The Young and the ObamaCare-less -- Review & Outlook, The Wall Street Journal

HHS is already rewriting rules to deal with adverse selection.
 

ObamaCare's defenders say its troubles are over as more people sign up and, by the way, stop griping because the law is here to stay. Much evidence says otherwise, to the extent that the embroidered information the White House is willing to release counts as evidence.

Lifting the veil of secrecy last week, the feds revealed that 2.2 million people nationwide had selected a plan through December. That is a major improvement, especially for the 36 federally run exchanges, which gathered 1.19 million total enrollees. Traffic increased sevenfold over October and November.

The Health and Human Services Department still won't say how many people have enrolled in a plan by paying the premium. But even assuming an implausible 100% success rate, the exchanges are still well behind the original target of seven million, much less the 20 million or so necessary to ensure a viable insurance market.

This is a failure by President Obama's own standard. About one of six Americans under age 65 lack insurance in the official statistics. So where are they? Either Democrats exaggerated the problem to pass the new entitlement. Or else individuals don't think ObamaCare plans offer value, and they're choosing to stay uninsured or buy insurance off the exchanges where the regulations are slightly looser.

For the first time HHS also disclosed data about the demographic mix on the exchanges and the types of plans people are choosing. In rational insurance markets this wouldn't matter because people would be charged premiums roughly proportional to their expected health risks. But ObamaCare's regulations require younger and healthier people to be overcharged in the name of equity and income redistribution, and if they don't report for duty then rates will surge over time.

Age is a crude actuarial proxy for health status, and merely 24% of enrollees are between ages 18 and 34. ObamaCare's economics needs that to rise to about 40% to achieve a critical mass. Enrollment also skews heavily to people 55 to 64 years old, at 33%.
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