“Already Large Enough”

March 27, 2014

During an interview with Lisa Zamosky, WebMD’s health care reform expert, President Obama said the pool of 4.2 million people who have enrolled in health plans on the federal exchanges was “already large enough.”

Large enough for what, you ask? The answer: large enough to spread risk and cost, and ensure the stability of the program. His full statement:

“The basic principle of insurance is pretty straightforward: the more you can spread the risk with more people, the better deal you are going to get. Now the pool is already large enough. The number of people who’ve signed up is already large enough that I am confident that the program will be stable.”

President Obama’s comment seemed innocuous in the context of the interview, which addressed questions from the online community about the health care law on topics including premium prices, ongoing issues with the Healthcare.gov website, and navigators. However, as a standalone statement, it was big and bold. After a rocky start, the President was declaring the federal exchange a success, having hit the benchmark that would allow it to run sustainably.

Hitting the outer rings of target is one thing. But reaching this particular target was akin to hitting a bullseye.

Bryce Williams, Managing Director of Exchange Solutions for Towers Watson, confirmed the President’s statement, with a caveat. “We would agree with the president,” Williams said, “but it’s really on a state-to-state basis.”

In other words, the enrollment numbers for the state-run exchanges are as important, if not more important, than the numbers for the federal exchange.

Also important is the demographic breakdown of that 4.2 million, which has since increased to 6 million as of this writing, according to official statements. With just days remaining until the end of the open enrollment period [except for those who qualify for recent deadline extensions], hitting the right demographic mix is especially important.

While the Obama administration initially courted “young invincibles” as the target demographic to support the exchange, 18-34 year olds in a good state of health, the target demographic was later expanded to included healthy Americans of any age. The rationale is that healthy Americans of any age offset sicker Americans who require more, and costlier care. The President has changed his tune to health, not youth, as the important attribute here.

President Obama concluded the interview predicting that “as people start feeling more confident about the website” and “some of the politics of the thing get drained away,” the enrollment numbers will continue to grow and in coming years, premiums costs will fall.

The final numbers for this very first enrollment period for public exchanges will be rolling in over the next few weeks, along with the demographic breakdown of those who purchased plans.

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