Two and a half months before the initial enrollment period ends, only 21.6 percent of Kentuckians who have signed up for a health plan are aged 18 to 34. The new health-insurance system depends on young people's signing up at higher levels to prevent premiums from skyrocketing, but just how high is open to question.
However, leaders of the Kentucky Health Benefits Exchange say they are not worried — for a variety of reasons. "It's early," Carrie Banahan, executive director of the exchange, branded as Kynect. "That's just coverage for the month of January, so we're not concerned."
Nationally, 24 percent of those who have bought insurance plans through government exchanges have been 18 to 34. Some insurance experts have estimated that the young need to account for 38 percent of total enrollment in order for insurance companies to keep premiums at approximately the same levels they had to guess at for the first year of the new system.
But those estimates were made without much knowledge of how much under-35 enrollment insurance companies were expecting in the first year and how that influenced their premium prices. "Health plans expected that the first year would be rough, so they preemptively limited their exposure," Sarah Kliff reports for The Washington Post.
"They don't really care what goal the White House set for young adults," Kliff writes. "What matters to them — and what will determine if rates need to increase next year — is who they expected to sign up." She quotes Aetna Inc. CEO Mark Bertolini as saying the national under-35 share was better than he expected, and this from Wayne DeVeydt, chief financial officer of Wellpoint, the largest company in the Blue Cross Blue Shield Association: “Things aren’t necessarily way out of whack with our expectations. It’s not about whether or not you're getting a sicker book [of business]. It’s whether you priced for it.”
When the companies set rates for this year, they were working with estimates of the age mixes in their risk pools would be, said Bill Nold, deputy executive director of Kynect. Final enrollment numbers won't be known until after March 31, the end of the regular enrollment period for the first year of coverage.
When Massachusetts implemented a similar plan several years ago, young people were slow to sign up, 22.6 percent of those who signed up in the first three months were aged 18 to 34. When enrollment ended, they made up 31.7 percent of the total.
One reason for the relatively small enrollment by 18-to-34-year-olds in private insurance plans is that 75 percent of those who have obtained coverage on the exchange have enrolled in Medicaid, the federal-state program for the poor and disabled. Almost 36 percent of the new Medicaid enrollees are under 35. They make up 32 percent of the combined enrollment of Medicaid and private plans.
Why is that? Perhaps because Kentucky is a low-wage state, and young people tend to have lower wages. The reform law, and Gov. Steve Beshear, made people earning up to 138 percent of the federal poverty threshold eligible for Medicaid, at no cost to them.
Banahan noted other possible factors: People who have purchased plans outside the exchange weren't included in the statistics it released, and the health-reform law allows young adults to remain on their parents' plans until age 26. That strengthens the financial stability of insurance plans, because young people have fewer claims.
Kynect required insurers to offer people under 30 a lower-cost plan that covers only catastrophic health events and does not offer the subsidies that apply to other private plans in the exchange. So far the plan has only 523 enrollees, 1.5 percent of the total, Banahan said.
Asked if the number was smaller than she expected, Banahan said, "I don’t know if we even made a prediction." She said one reason for the few enrollments might be the lack of subsidies, but illustrated how cheap such plans are, saying that in Lexington, a 20 year-old can get the highest level of plan for $130 a month.
There has been at least one surprise for those running the new system in Kentucky: 12,717 people bought a health plan without a subsidy. Banahan said that surprised her, and she attributed it to the convenience of signing up online.
Around the time the system began on Oct. 1, there were anecdotal reports that some people who qualified for subsidies said they didn't want them because they didn't want to accept government assistance. Asked about that, Banahan said, "The only thing we're really hearing is that people don't want to take the Medicaid . . . Some say please dis-enroll me from Medicaid" and agree to pay "the sticker price," the premium without any subsidy, Banahan said.
Nold said that while people may have a negative reaction to the word "assistance," but should remember that the subsidy is actually a tax credit, which will be refigured when they file their tax returns. He said the subsidy is "a reduction in an individual's taxes. . . . It is assistance, but it's assistance through the tax system."
On the 2014 tax returns, the amount of "advanced premium tax credit," or subsidy, "will be recalculated based on income and the plan they chose; some may have to pay more because they got too much tax credit, and some people might not have taken enough APTC and will have more tax credits," Nold said.
Kynect reported Friday that it had enrolled 162,099 people, 122,328 of them in Medicaid. The Medicaid share was 74.46 percent, down from 82 percent two weeks earlier. Private plans enrolled 39,771, and 27,054 of those received a subsidy to reduce their premium.
Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.