20% of Obamacare Enrollees Failed to Make First Payment

Robert Pear of the New York Times has an important story today on the actual, as opposed to heavily-spun, state of play with Obamacare take-up. One of the obvious issues is that the Administration is desperate to show that its giveaway to the medical-industrial complex is going over well with the too-dumb-to-figure-out-they-are-being-fleeced public. How many people who get insurance that were previously uninsured is a critical indicator of success.

But useful numbers have been astonishingly hard to come by. Obamacare “sign-ups” now total 3.3 million at the end of January. A Bloomberg article from Wednesday points out key gaps:

How many people turning to the health insurance exchanges had been uninsured before? Officials say they don’t yet have data on how many people signing up were previously uninsured, or how many had insurance that they lost when plans were canceled. We also don’t know how many previously uninsured people bought health plans off the exchanges. The Gallup data do suggest that the overall portion of Americans going without health insurance is declining as Obamacare kicks in, but we don’t have official numbers or much insight into the actual increase in insurance coverage.

How many people have paid their premiums? The White House is reporting numbers on how many people have enrolled in coverage on the exchanges, but not how many have paid for it. People won’t have coverage if they don’t pay their bills.

In other words, the gross number of people who obtain new Obamacare policies contains some churn, potentially a lot of churn. Source include companies curtailing or repricing their own policies so much as to force employees into the individual insurance market (many companies are doing this opportunistically and choosing to blame the Affordable Care Act). We also have the individual policy cancellations which were supposed to have been reversed (not sure whether or how this was accomplished; in any event, execution was stayed at best for one year). There also are some cases where people in the individual market did find what they thought was better coverage in Obamacare policies, but from what we can tell, these cases are far less common that the Administration would have you believe.

The New York Times story flags a second issue: that the “enrollments” number has a lot of what Wall Street would call air in the marks. A policy has not been sold until the customer has sent in the first premium. CNN reported on January 30 that its canvassing of insurers suggested that 20% of enrollees weren’t sending in their first payment, with estimates ranging from 18% to 30%. And one insurer expected this level of attrition:

CoOportunity Health said about 18% of the 11,000 Nebraska and Iowa residents who had signed up missed its Jan. 24 payment deadline and would receive cancellation notices this week. But even this final notice told recipients to call if they had intended to pay the premium.

The insurer had projected up to 20% wouldn’t activate their enrollment.

“We figure either those people had a change of heart or thought it was too expensive,” said Cliff Gold, CoOportunity’s chief operating officer. “Or maybe some people decided to keep what they had.”

The New York Times story, based on a more recent tally, confirms the CNN account. If anything, the average is likely to be a bit lower than 80% making payments, since the insurers that had lower payment rates typically had more Obamacare enrollees than the ones that had more success in converting enrollments to payments. Key extracts:

One in five people who signed up for health insurance under the new health care law failed to pay their premiums on time and therefore did not receive coverage in January, insurance companies and industry experts say.

Paying the first month’s premium is the final step in completing an enrollment. Under federal rules, people must pay the initial premium to have coverage take effect. In view of the chaotic debut of the federal marketplace and many state exchanges, the White House urged insurers to give people more time, and many agreed to do so. But, insurers said, some people missed even the extended deadlines….

Lindy Wagner, a spokeswoman for Blue Shield of California, said that 80 percent of those who signed up for its plans had paid by the due date, Jan. 15. Blue Shield has about 30 percent of the exchange market in the state.

Matthew N. Wiggin, a spokesman for Aetna, said that about 70 percent of people who signed up for its health plans paid their premiums…

Mark T. Bertolini, the chief executive of Aetna, said last week that the company had 135,000 “paid members,” out of 200,000 who began to enroll through the exchanges…

Kristin E. Binns, a vice president of WellPoint, said that 76 percent of people selecting its health plans on an exchange had paid their share of the first month’s premium by the due date of Jan. 31. The company had received more than 500,000 applications for individual coverage….

One big company, Humana, said it had received 200,000 applications for insurance through the exchanges. “About 75 percent of the people paid, and 25 percent did not pay,” said Thomas T. Noland Jr., a senior vice president there….

Local and regional health plans are sometimes more effective in contacting consumers.

Elizabeth A. W. Williams….said…“we have received payment from… 84 percent of the 27,528 people who enrolled through the federal marketplace in Independence Blue Cross health plans with coverage effective Jan. 1.”…

Scott Keefer, a vice president of Blue Cross and Blue Shield of Minnesota, said that 95 percent of people who signed up for coverage starting on Jan. 1 had paid premiums by the deadline of Jan. 10. The company, he said, made aggressive efforts to contact consumers and remind them that they needed to pay.

That effort was feasible, he said, because the Minnesota exchange’s website had problems that kept enrollment well below expectations. The federal government reported this week that fewer than 30,000 people had signed up for private health plans on the Minnesota exchange from October through January. Blue Cross and Blue Shield had one-quarter of the market.

Now it’s possible given all the difficulties with navigating the healthcare.gov site that some of their non-payers had duplicate accounts and thus are insured (as in they paid on one policy somewhere) but had duplicate (or even triplicate) enrollments that are being flushed out of the system. But presumably later enrollments won’t be subject to as much of this sort of confusion, so failures to pay will be the result of reconsideration or possibly difficulty in making the payments.

The New York Times and CNN stories are important reminders that the public can’t take the widely touted headline numbers on Obamacare at face value. It will take some time and a fair bit of analysis to assess how much progress, if any, has been made on one of the program’s key goals, which is reducing the number of uninsured. It may turn out that whatever success is achieved on that front will be primarily through expanded Medicaid rather than the cumbersome, inequitable, and overpriced private insurance plans. That would be no surprise to single-payer advocates.

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31 comments

  1. rowerjen

    Sample size of one but I have a friend who signed up through the New Hampshire exchange, mailed her check, which the insurance company did not cash, paid on line and still received a notification saying she hadn’t paid her premium. Which raises another possibility: that some of this is due to the inability of insurance companies to record payments properly. Now where have we heard that before? I’m sure her experience is the result of pure incompetence and has nothing to do with her pre-existing condition.

    1. NotTimothyGeithner

      The stories about ACA haven’t even begun to come out.

      “Now, this is real simple. It’s a website where you can compare and purchase affordable health insurance plans, side-by-side, the same way you shop for a plane ticket on Kayak — (laughter) — same way you shop for a TV on Amazon. You just go on and you start looking, and here are all the options. ” -Barack Obama September 2013

      “What we are also discovering is that insurance is complicated to buy” -Barack Obama November 2013. This would be a fitting title for the ghost written Obama memoir. He probably would grasp it could be construed as an insult.

      Yes, the story is more complex, but I think these two quotes more or less sum up the amount of care that went into ACA. The answer is none what so ever.

  2. Jim Haygood

    Presumably ‘payment’ means the first month’s installment in a series of twelve. Some portion of the 80 percent who made the first payment will drop out during the year due to ‘life events,’ such as getting sick and needing the money to pay deductibles and copays instead of premiums.

    Those who drop out will face a couple of potential consequences. One is getting their credit score dinged; another is having to repay their subsidies to the IRS.

    Sounds great, I’m signing up today! ;-)

    1. Yancey Ward

      Yes, I doubt the people who fail to pay all the payments even realize they will then be on the hook for any subsidy that was paid directly to the insurer. Certainly no one in HHS has bothered advertising this factor.

    2. MyLessThanPrimeBeef

      Will probably see a jump in ‘consumer credit’ thus ‘showing confidence in the economy.’

    3. Ray Phenicie

      Very good point about the subsidy; what if one cancels six months into the year? Will the whole previous six months subsidy be due back?! That entailment could be thousands of dollars; most folks don’t have that kind of dough laying about. Subscribers should be told this, one would think, before they enroll.

  3. Yancey Ward

    I would venture that even the 80% rate of payment is going to be much higher than the actual payment rate of the previously uninsured. If the exchanges really are largely filled with people who already had coverage in 2013 and before, then I bet 95% or more of those churned customers made their payment (they are just old customers used to making insurance payments), meaning the newly insured are paying at a far lower rate than 80%.

    1. NotTimothyGeithner

      It’s a pet theory of mine, but I have some experience with democratic field work. What the volunteers said on the phone defied belief, and I can’t even imagine what they said while canvassing. The poorly written script is there for a reason.

      I believe a good number of people have heard how in Europe taxes are paid and health care is just received, and I bet between that narrative and the Oboe claims about ACA which are often bizarre have created some bizarre ideas among the newly insured and re insured about how ACA works. I expect complaints about copay and deductibles not being paid at all to start soon.

      1. just_kate

        Yep, I expect this will be a big issue with a lot of newly insured people who will feel like they are paying for service they can’t use. Money for nothing.

      2. Ray Phenicie

        The bronze plain from Blue Cross Blue Shield of Michigan involves a $ 6500 deductible, plus a 20% coinsurance amount on any hospital admissions. In a worse case scenario for an emergency stay in the hospital and deeply involved care if the claim totaled say $50,000 the insured claimant owes $15,200~ 20% ($8700) + 6500. For those interested I would suggest a fun poll among your acquaintances and test them on the word ‘co-insurance’ and see what comes up.

  4. Not impressed

    True story…I’ve tried to purchase health insurance for my girlfriend. (Our state did not participate in Medicaid expansion, nor does she qualify for Medicaid…she owns her own home). We applied with Blue Cross/Blue Shield back in October 2013….and heard nothing. I checked back with them every 2-3 weeks or so, and was told to be patient…that they were heavily backlogged, and it would take awhile to get to her application. Yesterday, I checked back (exasperated that it was taking so long) and they told me her application had started to be reviewed by a temp., but was then set aside errantly….(which I doubt)

    However, they said they could approve it that day, if I agreed to pay all the premiums going back to October 2013 !!! I told them that would be like making payments on a new car sitting on car lot that you never owned, or ever got to drive ! I said “no thanks”…and I’m not sure I would ever want to business with a company with those kind of ethics anyway.

    So, I checked to see what health insurance plans are available…there are only 14 available, and the lowest premiums are $6000 with a $6000 deductible….so basically, she’s self-insured up to $12,000….that’s exactly where we are now !

    She’ll pay the $95 fine instead (she makes less than the individual poverty level $14,900)

    1. Jess

      What I wonder about is how many people who need to use this overpriced insurance for something significant will simply get the treatment and walk away from paying the bills when they come due? Sure, you’ll have to pay the co-pay at time of admittance, but I can see people (who don’t own much in the way of assets) getting massive follow-up bills from doctors and hospitals and just saying “F-U”. If you don’t have much for the collection agencies to seize, your income is hit-and-miss or multi-employer job-specific like laborers or small construction guys (meaning hard to garnish wages), I can see some people just changing their cell phone number and ignoring the bills that come in the mail.

    1. NotTimothyGeithner

      The high point was when Obama announced that buying insurance was actually really complex.. I don’t think anything ACA related can top that.

      “What we are also discovering is that insurance is complicated to buy” -Barack Obama November 2013.

      He is a lawyer, and ACA is his legacy. Obama understands ACA is his legacy. He has embraced it.

  5. Joshua Green

    Really, Obamacare has changed a negative for all insurers. I have heard that there is this one proposal made which pressurizes the insurers to enhance the size of medical provider networks that they offer their customers. I get to hear that proposals will threaten both bottom line insurers as well as consumers.

  6. j gibbs

    Health insurance, my ass! Let me tell you a story about everyone’s favorite program, Medicare.

    Non-healing wounds are a major problem among the elderly. For at least ten years it has been a matter of common scientific knowledge that roughly seventy-five percent of venous stasis ulcers can be healed by topical oxygen treatments within fewer than ninety days. The application of conventional wound therapy, consisting largely of compression and the daily changing of moist dressings, routinely results in wounds which fail to heal for years and years. More than occasionally, they never heal. Medicare has perversely refused to cover any kind of topical oxygen therapy. It limits hyperbaric oxygen therapy to wounds qualifying as Wagner Grade III presented by diabetic patients, which wounds are “due to the diabetes”.

    Medicare is great only so long as your condition is one which has a long standing covered treatment. Otherwise, you not only can’t get reimbursed for the cost of treatment you need, you also cannot get the treatment, because doctors enrolled in Medicare cannot legally charge patients who are willing to pay for treatments Medicare chooses not to cover.

    It’s a very good thing that most of medicine goes back to a time before Medicare began requiring every new treatment to jump through endless cycles of double blind clinical trials. Otherwise, it might by now have put a complete stop to the practice of medicine. And of course, private insurance is even worse on this score.

    1. afisher

      BS! Having a bit of a history in this area – it strikes me as odd that someone with a debilitating disease knows so little about the advances that have been made in treating these wounds. Dermagraf and Apligrap have been successful in treating diabetic wounds and hyperbaric treatment has been defined for a wide variety of processes.
      Please serve some cheese with that whine. Incompetence is no excuse, especially if this is what your “medical professional” is selling you.

      1. j gibbs

        Not every person with a venous stasis ulcer is a diabetic. Dermagraf and Agrilap sound like two thirds of a Russian law firm. I have had this f**king thing on my leg for two years and I do my own research and do not rely on medical f**king professionals who are people who say hello to you twice a week after keeping you waiting two hours. All they do is tell you the wound is looking great, change the dressing and make certain they have your insurance information.

        By the way, how old are you and what’s your racket?

      2. j gibbs

        Dermagraft is a sterile, cryopreserved, human fibroblast–derived dermal substitute generated by the culture of neonatal dermal fibroblasts onto a bioresorbable polyglactin mesh scaffold.

        Apligraf is manufactured from a living neonatal male foreskin and it consists of two primary layers: the epidermal layer is formed by human keratinocytes and has a well-differentiated stratum corneum; the dermal layer is composed of human fibroblasts in a bovine Type I collagen lattice.

        Call me crazy, but I’d prefer oxygen. And Apligraf appears to violate the Covenant of Abraham.

    2. j gibbs

      One more thing: hyperbaric oxygen is limited by Medicare to 15 specific indications, only one of which applies to wounds and that one only applies to diabetic wounds, as I originally stated. All of the indications dovetail with those established by the Undersea and Hyperbaric Society, which appears primarily concerned with the welfare of divers. The Medicare NCD simply copies those UHS indications and changes the wording, perhaps to cover the tracks of the guy who wrote the NCD and then took an early weekend. The more one learns about all this the worse it is, just like business and law and finance.

  7. Outlaw Josey Wales

    Affordable Health Care Act………. Whom ever named it that should be committed to an institution with the insurance, what a joke obviously they work for the gov’t. They are not required to have this coverage, wonder why? That should have told everybody it is not worth the paper it is written on. They live off of the tax contributions of the middle class for their insurance, don’t they have it for life after serving a term or two ? How 1 sided is that? Unions are self insured with their dues, They are exempt from this gov’t imposed tyranny. Many married couples will be filing separately to take advantage of the gov’t subsidies if you make less than 62,500 a year. How will that complicate the tax return? Our congress & senate do not care, they have the best health care at our expense ! What ever happened to Gov’t for the people, by the people? They are supposed to work for us. This is just another pitfall by big Gov’t to drowned the working people of America, we were a Republic, I do not think so now.
    How many people can afford $500 a month premiums with a $ 5000 deductible per adult that $1000
    a month for the premium, more than my housepayment, no wonder there is a high default, like mentioned in the other comments, when times get tight this will be the first thing not payed, then you get ill, you are %$#$% ya know. Can’t win for losing with big Gov’t in charge, look at our school systems, they took over the states rights for education, Gov’t is failing the citizens.

    1. hunkerdown

      You’re talking religion, not history. What does a republic have to do with government for/by/of the people? The most salient feature of represerntative democracy is that the ruling class is elevated above and defended from the citizenry.

      Please, read Federalist #10, read up on the Shays’ and Whiskey Rebellions, and then see if you can claim with a straight face that the founding fathers were at all interested in anyone outside the gentry having any voice in government.

  8. Richard

    Normally, to qualify for Medicaid, a person has to be indigent, that is, they cannot own any substantial property, such as a house. Most likely, some of the people who will be put into Medicaid due to the ACA mandate might own a house or some other property of value. According to some websites, those people’s property may be subject to confiscation by the state if the person ever makes any Medicaid claims to pay for treatment.

    1. Yves Smith Post author

      No, that changed under the ACA. Please read the post it is clearly laid out.

      And even previously you could own a house, furnishings, personal property, and a car. The assets test was not to have more than $2000 in addition to that.

  9. Jagger

    —And even previously you could own a house, furnishings, personal property, and a car. The assets test was not to have more than $2000 in addition to that.—-

    True enough but those assets are yours only temporarily for long term care. Once you and spouse are deceased, then Medicaid comes after those assets.

    1. Richard

      Thanks, Jagger. It appears that the main concern is that the Medicaid recipient’s children would be unable to inherit the parents’ property; instead, it has been subject to confiscation by the state to pay for claims (if any) that Medicaid paid for the parents’ treatment. That has always been true in cases where, some years prior to the need for long-term care, a person uses Medicaid’s asset protection rules to transfer ownership of the property to the children to protect it from later confiscation by Medicaid. That has also been called “asset spend down,” the purpose of which is to make the person officially indigent in order to qualify for Medicaid-financed nursing home care. The question is, have Medicaid rules been completely changed, as Yves Smith seems to say, such that ACA Medicaid enrollees’ property (if any) will be protected from potential confiscation by Medicaid?

  10. scott

    Here’s where I got stuck. I retired at 58 when I became eligible to keep my municipal government health plan but I pay for it out of pocket with no city contribution. Its with Cigna and costs me $4300/year out of pocket. A good deal that allowed me to retire early. I went to the the Obama website in December to see what an ACA policy would cost as I am not eligible for medicare and the costs and deductibles have, of course, been rising on my current plan. For example a colonoscopy cost me over $600 bucks last year. I got to the point at the Obama website where it asked if I had an employer provided plan and if so to contact the HR dept and have a copy of my plan sent to the ACA people for review. I could go no further. Given that it was early December my chances of having the city HR send a policy to ACA people and enroll in an Obamacare plan…. if even eligible would be nill I cant even compare my option. I do not want a subsidy but being able to deduct my private health plan would be useful but I’m not even sure I can do that. This program is a monstrosity that has not been at all though out and yet its been three years since it became law. Truly frightening to think this is the level of competence in this administration.

    1. j gibbs

      Here is what you’re missing. Politics is another racket, just like health insurance. Obama’s idea was simple: deliver the people’s assets to the health insurance companies. He did it. The insurance companies are in the business of collecting premiums and denying care. They are doing that. All you need to look at is the profits and executive rake offs of the health insurance companies and how they are increasing as this Affordable Extortion Act goes into effect. If I were young I would pay the $95 and let the politicians stick the bronze plan where the Sun don’t shine.

      What we are facing is economic warfare. Every monopoly is determined to extract every last nickel while at the same time degrading every product and service. People can either fight back or let themselves be fleeced. There is no third way.

  11. Diana Prince

    BCBS has been unreachable by phone for months – for customers in NY, CA, FL, TX and several other states. Many people have paid their premium and not received a member card/ID# or any information they would need to use their insurance – or if they managed to get through on the phone, the ID number they were given didn’t work. I signed up in Dec, paid my premium in early Jan before the Jan 15th deadline, but only received a card yesterday – with absolutely no other information whatsoever. It’s also worth noting that you can’t contact them via their website without an ID number because you need one to log in – though apparently they are not returning those messages anyway. I managed to reach them once on the phone at the end of Jan and begged them for an ID#, but when I tried to fill a prescription, I was told it was invalid. When I tried to log into their site, it only worked randomly after numerous attempts – which is also baffling? But that was a pointless exercise because no one responded to my message anyway. To be honest, I do not want to conduct any healthcare related business online at all as there is zero expectation of privacy. I don’t want my private health information connected to an online profile in any capacity at all – especially on a site that requires third-party cookies to function.

    The “official” advice from everyone – including NY State has been to continue to pay them anyway – plus all out-of-pocket costs – in the hope that you will be reimbursed. wtf? More bizarrely – this hasn’t been in the news anywhere. I had no idea how widespread the problem was until I randomly saw a link to their facebook page for CA.

    Apparently there was some kind of investigation by the AG in NY and now they are offering reimburse some people for 3 weeks and pay $2 million for “education” to encourage people to use the exchange (really?!?). Again wtf? They expect me to pay for insurance that I couldn’t use or even confirm that I had, from a company that is completely unreachable? Now suddenly in the past few days articles have appeared blaming customers for non-payment. I paid them in Jan – but the payment wasn’t even deducted from account until early Feb. (Blue Cross Blue Shield = Big Corporate Blood Suckers) so where are these numbers coming from?

    This has been a complete disaster in every possible way. Nothing is being done to fix it because everyone is focused on pretending everything is great to protect the administration from bad press. None of the information available is reliable at all. Seeing that quote from someone at BCBS about customer payment nearly made my head explode.

    I have been looking online to see if I can find out more about what exactly is going on but there is very little information – just a few blurbs (see link below).

    Sorry for the rant. I’m so frustrated and upset that I can’t write about it coherently.
    http://www.nysenate.gov/news/capital-new-york-ag-probes-empire-blue-cross-blue-shield-over-health-exchange-complaints

    http://www.governor.ny.gov/press/02092014-empire-blue-cross-blue-shield

  12. JT

    To avoid complying with Obamacare In Texas, Blue Cross Blue Shield claims customers must have an account number to make a payment. BCBSTX claims they send a welcome letter and an ID card to new customers — with the account number on the ID card. In all actuality, the customer receives neither the welcome letter nor the ID card. Therefore, without knowing “their” account number, the customer is not only unable to pay the first month’s premium; they are also not able to register an account online or even receive a phone number, email or address with which to contact BCBSTX. They do, however, receive a no-reply email from BCBSTX containing their worthless Case ID and Tracking ID #’s!!!

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