When agencies release information on a Friday afternoon, it is generally because of unfavorable news they hope will lose potency over the weekend. On Friday, the Department of Health and Human Services (HHS) released 2015 end-of-the-year exchange enrollment data. After reviewing the numbers, it is understandable why HHS would want this release to attract as little attention as possible.

Most news stories reporting the numbers have focused on the large overall decline in exchange enrollment throughout 2015—down 25% from the number of people who selected a plan at the end of open enrollment—or how the end-of-the-year number failed to meet even HHS’ downgraded target. The most striking number from the data, however, is the large drop in exchange enrollment—equal to about 1.13 million people—during the last six months of the year. As I explain below, this large net decline is problematic for the future of the Affordable Care Act (ACA) as it likely exacerbates other adverse selection problems induced by the law.

Takeaway #1: Large Decline in Exchange Enrollment, Final Number below Downgraded Target

At the end of open enrollment on February 15, 2015, 11.67 million people had selected an exchange plan. But by the end of the year, only 8.78 million people were enrolled in an exchange plan—a 25% decline. End-of-the-year enrollment was below HHS’ target of 9 to 9.9 million people, and this target was already significantly below the Congressional Budget Office’s estimate of 13 million.

A large part of the decline from February 15 through the end of the year resulted from people who selected a plan during open enrollment but never effectuated enrollment by paying a premium. This was likely responsible for about half the total decline since February 15 as there were about 10.12 million effectuated enrollees on March 31.

Takeaway #2: Inability to Verify Eligibility Led to 501,000 People Removed from Plans in States Using HealthCare.gov

According to HHS, the federal government removed 501,000 people from coverage in 2015 in the 37 states using HealthCare.gov because they failed to produce “sufficient documentation of their citizenship or immigration status.” A comparable number is not available for the states with their own exchanges. On March 31, about 7.5 million people had effectuated coverage in states using HealthCare.gov and 384,000 were removed because of citizenship or immigration issues after that date—more than 5% of all enrollees. Of note, a report from the Committee on Homeland Security and Governmental Affairs estimates that the 580,000 people enrolled who could not verify their legal status (includes people removed in 2014) and were removed before September 30, 2015 likely received improper tax credits of about $765 million.

Takeaway #3: Huge Decline in Exchange Enrollment during Last Half of 2015

The following table shows two numbers for exchange enrollment at the end of each quarter in 2015—the top row is the number reported by HHS and the second row is the number after removing enrollees who could not verify their citizenship or immigration status in the 37 states using HealthCare.gov. For example, HHS reported that it removed 306,000 such enrollees between April 1 and June 30, so I subtracted that number from what HHS had previously reported as the March 31 enrollment. HHS reported removing 48,000 enrollees and 30,000 enrollees who could not verify their legal residence status in the third and fourth quarters, respectively.

The table shows a slight 28,000 net enrollee increase between March 31 and June 30 as people signing up during the special enrollment period in the 2nd quarter exceeded those dropping coverage. People can sign up for coverage over the course of the year if they have a qualifying life event, like a change in family size, a loss of job, or a move to a different state. According to HHS, 944,000 people selected a plan through HealthCare.gov using a special enrollment period between February 23 and June 30.

The key finding displayed in the table is the large drop in net exchange enrollment in the 3rd and 4th quarters of the year. In total, the exchanges lost 1.13 million net enrollees during that six month period—a decline in net enrollment of 6.3% from June 30 to September 30 followed by a decline in net enrollment of 5.4% from September 30 to the end of the year.

Why Such Large Attrition?

In November, The New York Times reported that many people find their plans are generally of little value when they try to use them. The main culprit is the extremely high deductibles faced by people earning above 200% of the federal poverty line—about $23,500 for a single person—who do not qualify for government assistance to significantly reduce them. The unattractive exchange policies are also of little use to relatively healthy people who might look to newly enroll for coverage in the second half of the year because of a genuine qualifying life event.

Additional factors likely contributed to the coverage drop-off in the second half of 2015. These include the ACA’s 90-day grace period, which allows enrollees receiving tax credits to maintain coverage for three months even if they fail to pay their monthly premium—a significant incentive for people to stop paying premiums at the end of the year. Further, as many insurers claim, people may have simply figured out how to game the ACA. In short, this entails people signing up for coverage before they need health care services, including by inappropriately using a special enrollment period, and then dropping the coverage after they consume the services.

Threat to the Law

As I detailed in a Mercatus study in November, the exchange risk pools contain a disproportionate number of older and less healthy people. Because of the ACA’s regulations and price controls, insurers needed to enroll a large number of younger and healthier people to offset losses incurred on older and sicker enrollees. In 2014 and 2015, insurers took steep losses—largely because the desired risk pool did not materialize. Younger and healthier people are making an economically rational decision and foregoing exchange coverage.

It’s not surprising that HHS waited until a Friday afternoon to release these numbers—large net attrition over the course of the year worsens the adverse selection in insurer risk pools, exacerbating the existing problem of attracting too few young and healthy people during open enrollment. People with more expensive conditions or who anticipate using more health care are much more likely to keep their plans compared to people who are relatively healthy. This, of course, will put upward pressure on premiums—which, in turn, makes the plans look even less attractive to the people insurers are most trying to attract. Without major changes to the ACA, there soon may not be a viable individual health insurance market in the country.