Kelly Kennedy

USA TODAY

Officials say younger people tend to wait to buy insurance

Younger enrollees will help subsidize cost of older people

Officials say 9 million people have insurance they lacked before the law was passed

WASHINGTON — More than half of the almost 2.2 million people who bought health insurance on federal and state exchanges in the past three months are older than 45, records released Monday show.

If that trend holds, it could skew the health insurance market as older policyholders that use more health care are not balanced by younger policyholders who tend to use less health care. In effect, the younger policyholders subsidize older ones.

Almost 1.2 million people have enrolled in private insurance through the federal health care exchange from Oct. 1 to Dec. 28, Health and Human Services Secretary Kathleen Sebelius said, and more than 1 million signed up in December alone.

Another 956,000 people have signed up for private insurance through state-based exchanges between Oct. 1 and Dec. 28, HHS records show.

About 55% of the early enrollees, Sebelius and other officials said, are between the ages of 45 and 64.

Despite the large percentage of older Americans buying insurance, about 26% of those who enrolled are younger than 35, HHS officials said.

Nancy Delew, acting HHS deputy secretary for planning and evaluation, said the percentage of young people is similar to that seen in the early months of Massachusetts' enrollment in its health exchange under former governor Mitt Romney, the 2012 Republican nominee for president. The Massachusetts law, passed in 2006, was the model for much of the federal law.

Federal and state officials said they are continuing their efforts to advertise the need to buy health insurance to younger Americans, who are considered essential to the financial health of the health insurance market because they pay premiums but often do not use many health care services.

A new Kaiser Family Foundation report found that 40% of enrollees would need to be young adults to "cross-subsidize" older adults if HHS reached the 7 million enrollees in private insurance that the Congressional Budget Office based its budget estimates on.

"If enrollment among young adults falls short, then the total amount of premiums collected by insurers will be less than the total health care expenses of enrollees plus administrative overhead and profit," the report states. "And, if insurers believe that those enrollment patterns will continue into 2015, then they may raise premiums higher to compensate for the loss."

Delew said HHS expected older Americans would sign up for health insurance earlier, because they needed it, while younger people will wait until the deadlines.

However, they said that if young people enrolled at the rate HHS said they're enrolling now -- or about 25% -- overall costs would be about 2.4% higher than premium revenues. Still, Kaiser called this a "worst-case scenario" as they also expected older people to sign up first and younger people to wait until closer to the March 31 deadline.

Aaron Smith, co-founder of the Young Invincibles, a group that works to enroll young people in the exchanges, said the ultimate goal of the administration and insurance industry is that 37% to 40% of enrollees would be younger than 35.

"I think where we're at now shows that we're on track for that," he said. "We saw huge numbers in December, compared to the previous months."

But Republicans immediately attacked the numbers, saying they are not enough to ensure the exchanges' success.

Enrollment "has been a bust so far," said Brendan Buck, spokesman for House Speaker John Boehner, R-Ohio. "It's no surprise that young people aren't rushing to sign up."

The American Action Forum, a conservative think tank, said insurance enrollments aren't following the same pace as those for Medicare Part D, the prescription drug coverage program for senior citizens. It said the Obama administration risks not being able to meet the 7 million target.

Julie Bataille, spokeswoman for the Centers for Medicare and Medicaid Services, said 3.9 million people have signed up for Medicaid directly through the states, and that some of those enrollments are renewals. Combined with the young people still covered with their parents, that comes to 9 million people enrolled in private plans or Medicaid who may not have had the coverage before the 2010 passage of the Affordable Care Act.

Sebelius' announcement is another indication of the surge in enrollments since the troubled HealthCare.gov site was fixed Nov. 30. But the early problems surrounding the site, plus controversy over insurance policies canceled because they didn't meet the requirements of the Affordable Care Act, have damaged the early months of the implementation of this key part of the law.

"We're seeing a very strong response through the marketplace," Sebelius said, adding that people have 11 more weeks to sign up for insurance through the exchanges. Those who do not have health insurance after March 31 will have to pay a penalty.

States showing gains

Along with the surge in federal enrollments in December, state exchanges said they are seeing rapid gains.

Peter Lee, executive director of California's health exchange, said younger Californians are "enrolling at rates similar to their population."

California is also stepping up its advertising to younger people. On Thursday, it will start a YouTube campaign that uses comedians, celebrities and athletes to "speak to young people about why health reform is so relevant to them." Though it's led by California, the "Tell A Friend, Get Covered" campaign is nationwide.

Lee said the state will also focus on students returning to school after winter break. "It's all part of building on the momentum that there has been already to enroll young people," he said.

Monday's news comes just after CMS announced it has replaced its lead contractor, CGI Federal, with Accenture. Accenture built California's site, which has been leading enrollment numbers in the state exchanges.

"Accenture's been a very good partner for us," Lee said. "We've had bumps in the road, but it's been a well-managed process."

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