The Obamacare Void Rate: How Big a Factor?

While the White House and supporters of the Affordable Care Act continue to talk about the number of people “enrolled” via healthcare.gov, the reality is that no one is enrolled until they pay their first month’s premium. So how many “enrolled” people are actually enrolled? No one knows.

When the administration says 100,000 people enrolled in November (or whatever they say next week) the reality is that they are counting everyone who has selected a plan as enrolled. But as Allahpundit points out today, many who have selected a plan have yet to pay and may not do so in time for coverage next year.

Why does it matter? As Allahpundit writes “If you sign up but fail to pay by December 31st, it’s not a simple
matter of your coverage being suspended until you pony up. Your
enrollment is void and you have to re-enroll on the website in January.” This CNN Money article attributes the end-of-year voiding of unpaid policies to “federal officials.”

Depending how big the void rate is, it could cut deeply into the enrollment totals the White House has been announcing thus far. The other question worth asking is how it might impact the risk pool. Remember, the White House says they need about 38 percent of the enrollees to be under 35 to offset the cost of everyone else.

As a thought experiment, ask yourself who is more likely to fail to get their payment in on time and thus to have their selection voided. Will it be older Americans with health problems who rely on the insurance or will it be young invincibles who maybe got caught up in the media hype but don’t expect to see a lot of benefit from the program in the short term. I suspect it is more likely to be the latter. And if so then the void rate could disproportionately hit the young people the program needs to succeed.

Will people who find themselves voided for missing the deadline return to healthcare.gov to try again? Again, that may depend on who they are and how much they feel they need insurance. But it seems fair to say that the people least likely to try again are those the law is depending on to fund the policy.

Whatever disappointing enrollment numbers the White House hands out as of January 1 will almost certainly be an overstatement. It would be good to know how much of an overstatement but, as with the 834 error rate, it seems unlikely the administration will tell us anything that might make the policy look unsustainable.