Obamacare cheerleaders are celebrating a 50 percent increase in applications on healthcare.gov in the first hours of open enrollment over last year. While we all want to see our fellow Americans taking advantage of the health insurance options available to them, this spike in applications doesn't necessarily represent a success for the law. It may actually be more evidence of the law's pain points than its offerings.
Here are a few explanations for the uptick in early enrollments this year:
First, returning customers should be becoming more familiar with the Obamacare enrollment process. Open enrollment starts on the same day every year. Year over year, we should expect better turnout at the outset as people come to expect the day.
Second, this year the start of enrollment immediately followed a report from the Department of Health and Human Services outlining big premium spikes, with an average increase for a benchmark plan at 25 percent. Naturally, customers are going to be curious about what plans are available to them in their county and at what rates. Concern is likely to be a bigger motivator than giddy excitement to enroll (or re-enroll) in an Obamacare plan.
Furthermore, Obamacare defenders hate to acknowledge it, but there are millions of (unsubsidized) people who continue to buy individual insurance policies outside of the exchanges. Why would they do this? A few reasons: Some plans are sold outside of the exchanges that aren't sold on the inside. Some people may enroll outside of the exchanges as a force of habit, or they may not like the idea of buying through a government entity. Some may be sure they won't qualify for a subsidy, so it doesn't make much of a difference to them.
The Obama administration thinks this off-exchange individual market holds about 7 million people, and that 2.5 million of them would qualify for a subsidy or tax credit if they purchased a plan through an exchange instead. As the pain of paying unsubsidized premiums increases, more of these people will consider buying via an exchange in order to get the financial assistance that may be available to them.
Finally, each year for the past three years the penalty for going without health insurance has increased. This might encourage more uninsured folks to explore their options in the exchanges, but it's hardly a sign of a good product when people only buy it to avoid a fee.
With these considerations, Obamacare cheerleaders might want to put the pom-poms down for a minute, and focus their energy instead on making health insurance more competitive and affordable. Then we might really see increased interest instead of what is probably simply increased desperation from Obamacare buyers.