(Andrew Harrer/Bloomberg)

Obamacare Enrollment Is One Of The Biggest Comeback Stories Of The Year

headline on Business Insider

This column has been updated

With all of the hoopla this week about the administration achieving 7 million sign-ups for the Affordable Care Act  insurance exchanges, we wanted to offer a technical note about the source of that goal — the estimate by the nonpartisan Congressional Budget Office that 7 million people would be enrolled in the exchanges. After healthcare.gov’s troubled start, CBO then reduced the estimate to 6 million.

Many reporters and politicians have assumed that this meant that CBO predicted that 6 million would be enrolled in the exchanges (and separately an additional 8 million in Medicaid) when the enrollment period ended on March 31. Indeed, on Sept. 5, 2013, Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services, sent Health and Human Services Secretary Kathleen Sebelius a memo titled, “Projected Monthly Enrollment Targets for Health Insurance Marketplaces in 2014.” That document laid out month-by-month enrollment targets, culminating in 7 million by March 31.

But that’s not really what the CBO estimate says. CBO provided a calendar-year estimate, meaning that the equivalent of 6 million people would be enrolled for an entire year. So each of those 3 million or so people who signed up for coverage in the past few weeks would really only count as two-thirds a person, for calendar-year purposes. (That translates to 2 million people over a calendar year.) People who only were on an exchange health plan for a month, and then either stopped paying or got a job that provided health insurance, would count as 1/12 calendar year.

Given that only about 2.25 million people signed up by Dec. 31, and thus in theory would have coverage for the whole year, you can see why CBO lowered its estimate. When all is said and done, the administration might just meet CBO’s revised estimate of 6 million people enrolled for the 2014 calendar year. Our rough guess is that, as it stands now, it will turn out to be about 6 million people over the calendar year, assuming everyone who signs up actually make a payment. That’s obviously a big assumption, but the tally could also be affected by last-minute sign-ups and “life events” such as marriage or leaving a job, which allows a person to buy insurance on the exchanges after the open-enrollment period ends.

(The figures above updated with a more precise calculation and a corrected number, courtesy of Charles Gaba, who has tracked this better than anyone. Update, April 18: With the administration’s announcement of 8 million sign-ups, the CBO’s 6 million calendar-year estimate should be met.)

CBO’s estimate that the law’s expansion of Medicaid would increase enrollment by 8 million is also a calendar-year projection.

Why does CBO calculate it this way? The analysts are trying to judge the impact of enrollment on the federal budget, in terms of subsidies that would be paid to insurance companies or the cost of funding Medicaid. (The federal government initially is paying all of the cost of the Medicaid expansion.)

Separately, millions of people bypassed the exchanges and bought health plans directly from insurance companies, especially during the period when healthcare.gov was not working properly. (Blue Cross Blue Shield, for instance, sold 1.7 million Affordable Care Act-compliant  plans between Oct. 1 and March 1.) CBO has provided less detail on this market, on the assumption that these plans would not qualify for subsidies. For calendar year 2014, analysts estimated that approximately 8 million people would purchase plans through brokers, insurance agents or the companies themselves. If the Affordable Care Act had not been enacted, analysts said 10 million Americans would have purchased such plans, meaning the law is expected to reduce the total by 2 million people.

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