The young and the healthy are not signing up for health insurance nearly as fast as supporters of the Affordable Care Act had hoped, and the people who are signing up tend to be older with more health problems than the population as a whole.
Despite predictions this is the making of “an unbalanced patient pool” that will further discourage the young and healthy, New Mexico has been down this road before, and the initial results were satisfactory, according to two Presbyterian Health Plan executives.
When health insurance becomes available to people who haven’t had coverage before, the older, less healthy people always sign up first, a phenomenon known to the insurance industry as “adverse selection.”
As time goes on, younger and healthier people sign up, which lowers the average cost of care for the entire insured group, said plan President Lisa Lujan and Government Programs Vice President Mary Eden.
In 2005, New Mexico health plans offered State Coverage Insurance to adults who earned less than 200 percent of the federal poverty level and were ineligible for Medicare or Medicaid. The cost of coverage was subsidized with government funds.
In the first year, Lujan said, Presbyterian had an average of 100 customers enrolled in SCI. They rang up medical costs that averaged $817 each per month.
By 2008, an average of 6,000 people had SCI from Presbyterian, and medical costs had dropped to $586 per month for each member.
In 2013, an average of $352 per month was spent on medical care for each of Presbyterian’s 11,000 members.
SCI has ended now that low-income adults can qualify for Medicaid and for subsidized coverage on the new exchanges.
“The people who enroll quickly are usually the ones who have fairly significant needs,” but over time, their needs stabilize and eventually, as happened with SCI, people without significant medical needs also sign up, Lujan said.
Lujan expects Obamacare and Medicaid enrollment to follow the same pattern.
SCI enrollment really started to surge when the state began offering generous subsidies to offset members’ premium costs, Eden said. Companies offering SCI also began successful marketing campaigns to increase enrollment, she said.
Lujan said insurers expected adverse selection in Obamacare’s early years and created and priced products accordingly.