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Number of people paying premiums is key Obamacare test

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President Barack Obama speaks about the Affordable Care Act

President Barack Obama speaks about the Affordable Care Act at the White House on Tuesday, claiming 7.1 million sign-ups for health coverage. (Manuel Balce Ceneta/The Associated Press)

“The Affordable Care Act. To date, over 10 million newly insured Americans benefiting from the law are now in effect, now have the benefit of that. And there’s millions of more who have changed their insurance because of this legislation.”

Sen. Harry Reid, D-Nev., on the Senate floor, March 31, 2014

For months, politicians have rushed out with either wildly inflated – or deflated – numbers about the Affordable Care Act, a.k.a. Obamacare. On Monday, Senate Majority Leader Harry Reid claimed that 10 million people now are “newly insured.”

Here’s what Sen. Richard J. Durbin, D-Ill., said on Feb. 9:

“The bottom line is this: 10 million Americans have health insurance today who would not have had it without the Affordable Care Act. Ten million.”

Actually, the best estimate back then was about 4 million who were newly insured.

And then there is House Speaker John Boehner, R-Ohio, just two weeks ago:

“When you look at the 6 million Americans who have lost their policies and some – they claim 4.2 million people who have signed up – I don’t know how many have actually paid for it – that would indicate to me a net loss of people with health insurance.”

This was nonsensical math. By any measure, millions of people have gained insurance.

With the enrollment period ended on March 31, it’s time to do the numbers. What do we actually know about Affordable Care Act enrollment numbers – and what is missing?

First, let’s take a look at Reid’s assertion of “over 10 million newly insured Americans.” What is the source of that statistic?

Reid’s staff pointed to an article in the Los Angeles Times, which claimed that “at least 9.5 million previously uninsured people have gained coverage.” A big part of that figure was “at least 4.5 million previously uninsured adults have signed up for state Medicaid programs,” based on unpublished data from the RAND Corp. Reid then rounded up from that figure on the assumption that the recent surge of enrollments meant the numbers had increased.

But RAND economist Katherine Grace Carman said RAND’s data, which are based on a survey of 2,600 people, simply note the percentage change in the insured; the Times then did its own calculations to translate those numbers into millions of people. Because the RAND data are based on a survey, they have a margin of error that could significantly change the results.

As of March 22, the survey found that the percentage of Americans on Medicaid had increased from 7.7 percent in 2013 to 10 percent in 2014; with the survey’s margin of error of 2 percentage points, the percentage of Medicaid recipients in 2014 could be anywhere between 8 and 12 percent. Carmen said the Times calculated that the 2.3 percent increase would translate into 4.5 million people, but that’s not RAND’s calculation. With the margin of error, the numbers could swing dramatically. As an economist, Carmen said, she felt more comfortable sticking to just percentages.

Moreover, one cannot assume that the increase in the Medicaid population reflected in the survey consisted only of people who had never been insured. A significant percentage may have been previously insured but now qualified for Medicaid because of the law’s expansion of the program.

In terms of numbers, a 4.5 million increase in Medicaid would be a setback for Affordable Care Act because the Congressional Budget Office estimated that 8 million people would be added to Medicaid in 2014. CBO also estimated that the number of uninsured would be reduced by 13 million and the RAND survey indicates that estimate would also fall well short. “It is quite a bit lower than these other numbers,” Carmen said, referring to the difference between RAND’s calculations and the CBO estimate.

Reid, in other words, fell into the trap of grabbing from a news report the highest-estimate numbers he saw – and then inflating them a bit. (He’s done this before.)

By contrast, President Barack Obama was relatively careful in his news conference on Tuesday. Let’s look at his specific claims.

“7.1 million Americans have now signed up for private insurance plans through these marketplaces … .”

Note the phrase “signed up.” As we have repeatedly pointed out, a key test is how many people actually pay the first month’s premium. No one really knows what the trend is but, as a rough guide, The Fact Checker is using an 85 percent payment rate. That is the experience in California and the Golden State accounts for about one-fifth of enrollments. An 85 percent payment rate would translate into about 6 million actually paying premiums.

(Why would people sign up but then decide not to make payments. One reader, Yossi Gestetner, sent The Fact Checker his account of the choices involved. While he qualifies for subsidies, his plan also comes with deductibles and co-pays that he thinks are not affordable if he or his wife have major medical problems.)

As a result of the payment-rate question, some readers tweeted that The Fact Checker should brand this White House tweet a lie:

“That’s why 7.1 million people got health insurance. Because people got the word out.” – President Obama #7MillionAndCounting

But, wait, there’s more. In every state (except Vermont and in the District of Columbia), you can buy insurance outside the exchanges – by going directly to insurance brokers, agents or companies. At least 550,000 people have already purchased qualified health policies “off exchange” and the real number is almost certainly double that. So the net result is probably 7 million. Thus, Obama is probably on safe ground to cite the enrollment figure, especially when he uses the phrase “sign up.”

What percentage of the 7 million are “newly insured?” No one really knows at this point, though a reasonable, conservative estimate would be about one-third. That’s a little over 2 million people ” … on top of the more than 3 million young adults who have gained insurance under this law by staying on their family’s plan.” This is a two-year-old figure, based on a Health and Human Services Department estimate, and so it is a bit dubious.

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