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January 21, 2015 at 07:32 AM
(Bloomberg View) — Compared to last year, Obamacare’s 2015 open enrollment is a boring story — no spectacular IT failures, no politically charged policy cancellations.
And as the Patient Protection and Affordable Care Act (PPACA) public exchange system wends to the end of its second open-enrollment period, it would seem that we should know more about the shape of the final program. What have we learned so far?
The answer is “less than you’d think.”
See also: What to look for in judging Obamacare’s year two.
Here’s what we do know so far. There have been about 7.8 million confirmed enrollments or renewals in qualified health plans. Vermont is not going to have single payer. More insurers are entering many markets, but some insurers have already run into trouble. Information about the uninsured is somewhat scarce, but my best guess, based on the Gallup numbers, is that about 4 percent of the population has gotten insured since Obamacare started, or roughly 10 million to 12 million people.
On the other hand, much about the future of PPACA remains murky. Here’s a list of the things we still don’t know, and won’t for a while:
1. What will prices look like on the exchanges?
The path of prices depends on a lot of factors, but for our purposes, this is the most relevant question: Are customers sticky — i.e., do they tend to stay with the insurer they started out with? Or do they shop around every year?
If consumers could be expected to shop yearly, then prices should start about where insurers expect them to end up, then stay relatively stable.
On the other hand, if consumers are sticky, then prices will follow a very different path: Insurers will underprice for a few years, then jack them up once the flow of new customers into the exchanges slows to a trickle. You can argue that we’re already seeing some of this: In many markets, last year’s low-cost plan got more expensive while a new insurer assumed the role of “low-cost provider.”
See also: PPACA exchange users may be standing pat.
Insurers seem to have decided that consumers are sticky, and I’m sure they know better than I do. Plus, this fits what we know about other insurance markets — when was the last time you shopped around for auto insurance? Maybe you’re one of those virtuous souls who reprices insurance every six months, but most of us think that’s too much bother.
With health insurance, you have the added wrinkle of figuring out which doctors take your insurance; once you’re settled into a network, customers may well be reluctant to change, especially with the new, narrower networks that make finding doctors even more of a challenge.
What this means is that prices now don’t necessarily tell us much about prices later — especially since the administration is still funneling subsidies to money-losing insurers through various risk-sharing programs. Also, there are various sorts of startup insurers in many exchange marketplaces, and those insurers may simply be mistaking their eventual costs.
All of this adds up to the possibility that prices will begin to rise steeply in 2016 or 2017, as the risk-sharing programs expire and the markets begin to shake out. Most consumers will initially be insulated from those cost increases by the subsidies, but starting sometime after 2018, there’s a subsidy cap that will kick in if prices grow too quickly, meaning that consumers could ultimately see some of those price increases.
