Kaiser Family Foundation Survey Finds Most People Who Bought Health Insurance On The Exchanges Are Happy With It And That 57% Were Previously Insured––No One Should Be Surprised On Either Count

Let's take a look at both of these headlines:

Most People Are Happy
But Kaiser only asked the people who bought health insurance on the exchanges if they were happy with what Obamacare offered them.

As I have said before on this blog, two out of three subsidy eligible people did not buy a health insurance plan in the first open-enrollment.

This week the administration also reported that 76% of those who received a subsidy paid less than the full premium for the plans they selected. And, 69% are paying less than $100 after the subsidies––46% are paying $50 or less.

It would appear from this data that it is the lowest income people who are most often signing up for coverage. They are the ones who get the biggest premium subsidies as well as the reductions in their deductibles and co-pays.

So, the Kaiser Family Foundation has found that these people who are having their premiums and deductibles disproportionately subsidized are happy with their coverage. Hardly a surprise. If you paid for most of my insurance and cut my deductibles from the standard levels I'd be pretty happy too.

But how happy are the people who found the Obamacare health plans so unattractive they did not buy? 

A recent McKinsey survey found that of the people who shopped for an Obamacare policy, 56% didn't buy. Think about that. Obamacare is a monopoly––you can only buy individual health insurance through Obamacare. The government will pay a big part of many people's premiums. Most people would more likely want to be insured than be uninsured. To top it all off, if you don't buy they will fine you!

After all of that, 56% of the people who went shopping didn't buy. Overall, two thirds of subsidy eligible people did not buy.

Perhaps Kaiser could poll the people who did not buy on how happy they are with Obamacare. After all, they make up by far the biggest group.

57% Were Previously Uninsured
The Kaiser survey also found that 57% of those who bought health insurance on the exchanges were previously uninsured. A number of press reports said that the Kaiser finding was much better than the recent McKinsey survey that found only 24% of those who signed up were previously insured.

Actually, the McKinsey finding and the Kaiser finding are completely consistent.

McKinsey found that 26% of those who bought on and off the exchange were previously uninsured––Kaiser found 57% of those who bought on the exchange were previously uninsured. It is no secret that most of those who bought their coverage directly from insurers were their prior customers making the two surveys pretty consistent in their outcome.

I reported on this Blog on April 22 that about half of those who bought on the exchanges were previously uninsured and half were not.

Here is what I said on this blog on May 13th:

[A]ccording to my travels in the market, about half that did buy it in the insurance exchanges already had insurance.

A just released McKinsey survey done during April estimates that 74% of those who bought coverage inside and outside the insurance exchanges had been previously insured––which would be consistent with my finding.

So, there is really no news here––about half of those buying on the exchange were previously insured.

I guess I am in danger of sounding like a broken record on this blog, but what I think the Democrats, as well as the Kaiser Family Foundation, are missing is that by far the majority of people took a look at Obamacare and passed on it.

According to the administration's latest enrollment report, 98 million people visited the state and federal websites while 33 million spoke to the call centers (these are not unique visitors). But only about 6.5 million completed their enrollments––and only one out of three subsidy eligible people bought health insurance.

If the supporters of this law really want it to be sustainable and find acceptance among voters and those eligible for it, they really need to begin to address the reasons why people are not buying it.

But the Kaiser Family Foundation survey does sound good.

Biggest Insurer Drops Caution, Embraces Obamacare

Kaiser Health News is out with that headline today reporting that UnitedHealthcare is expanding its Obamacare exchange presence planning to sell polices "in nearly half the exchanges next year." The story goes on to report that United's leadership is saying the new public marketplaces look sustainable.

There may be more to it than that.

Consider:

• A carrier laying back the first year will have the advantage of coming into the market after the first year carriers, particularly the big Blue Cross plans, have harvested most of the initial market share and with it all of those first year people who were pretty sick and wanting to take advantage of the new Obamacare underwriting reforms to finally get themselves covered. Yes, these people can change carriers the second year but they likely won't––particularly if they are sick and worried about their provider relationships.
• United currently has a lot of non-compliant individual business in these states. While carriers can continue the pre-Obamacare cancelled policies for another two years I don't know of any insurers that are. If United wants to hang on to the remainder of its non-compliant individual legacy business in the insurance exchanges––as well as pick-up other carrier's cancelled business––this is their opportunity to do so. The legacy policies are a relatively better health risk than those first year Obamacare enrollees, having already passed the pre-Obamacare underwriting requirements. And by being able to reissue these policies in the exchanges, United will be able to charge these existing customers the higher Obamacare rates.

United is quoted as saying they have far more information than they did a year ago. That is true but mostly for knowing just where the competitors are in the market. But it's only been a very few months since the Obamacare enrollment surge occurred in the last month of open enrollment––many of these people had May 1 effective dates. No one has any credible claim data yet to really be able to assess the first year enrollment.

As I have said on this blog before, any health insurance company in the individual and small group business has to play in the new Obamacare world. Obamacare is a monopoly. For not only the individual, but also the small group market, there is no other way to participate in the marketplace without playing in Obamacare.

But there are different ways to approach the market.

As the United CEO said in their earnings conference call today, "This [public exchange] approach is consistent with our long stated plan to take a prudent first year position and then build and expand in 2015 and 2016 as these markets become more established."

United's strategy of laying back a year letting the other guys pick-up the first year sick people and then making sure in 2015 to be able to keep and compete for the more healthy pre-Obamacare legacy business looks like a very savvy underwriting move to me.

The new health law does contain a risk adjustment system that is supposed to discourage any risk selection strategies by insurers. But if the experience with risk adjustment in Medicare Advantage is any indication, there is plenty of room for improvement.

I am sure UnitedHealth will now get plenty of plaudits from the administration and Obamacare supporters for expanding their public exchange presence arguing this announcement is proof of the new law's sustainability. So, on top of being a savvy underwriting move it will also turn out to be a shrewd political move for UnitedHealthcare––a division of United is also the Obama administration's lead federal health insurance exchange contractor.

Think about it. They implement an old-style underwriting/risk selection strategy and the Obamacare supporters applaud them for it!

Savvy and shrewd.

Sounds like something out of Netflix's House of Cards.