With the results now in from the Affordable Care Act’s (ACA) third open enrollment period, it’s getting increasingly difficult to sugarcoat the extremely low numbers of enrollees relative to original projections. The 12.7 million people who signed up for an exchange plan amounts to just half as many enrollees as was projected by government and private sector research organizations when the ACA passed. The Rand Corporation predicted 27 million, the Centers for Medicare and Medicaid Services predicted 24.8 million, the Urban Institute predicted 23.1 million, and the Congressional Budget Office predicted 21 million.

At the end of open enrollment last year, the Obama administration announced 11.7 million sign-ups. However, one month later, there were only 10.2 million people with effectuated exchange coverage. Assuming a similar trend this year, even accounting for the administration beginning to purge some people who have already failed to pay premiums, means that there are likely at most 12 million people currently enrolled in an exchange plan.

Over the past two years, overall exchange enrollment declined by about 2% per month as people who drop exchange plans during the year exceed those who sign up during special enrollment periods. A similar trend this year would result in about 10 million exchange enrollees at the end of December. This translates into roughly 11 million exchange enrollees on average during 2016—54% fewer enrollees than the consensus of experts in 2010.

Young, Healthy People in the Middle Class Are Shunning Exchange Plans

As I discussed in a November study for the Mercatus Center, low overall exchange enrollment is only part of the explanation for why the ACA is failing to deliver what was promised. Enrollment of younger, relatively healthy people with a middle class income is particularly low and has left risk pools filled with older and poorer people with more expensive health conditions.

The design of the ACA’s financial support is likely the reason that the only people buying exchange plans in large numbers are those whose incomes fall below 200% of the federal poverty level (FPL)—an amount equal to roughly $23,760 for a single person and $48,600 for a family of four. People earning below that level qualify for tax credits that significantly reduce their premiums and subsidies that substantially lower deductibles and other types of cost-sharing.

For people above 200% of the FPL, exchange plans generally contain too little benefit to be worth the cost. For example, a family of four in Roanoke, VA headed by a 40-year old couple with $60,000 in income faced a $5,080 annual premium, after applying about a $5,000 tax credit they qualified for, and a $5,000 deductible for the second-lowest cost silver plan available on the exchange. Each additional dollar of income earned by the family reduces the tax credit by about 14 cents. If this family earned income above $97,200, they would not qualify for any tax credit.

A recent study from three Wharton economists at the University of Pennsylvania found that “[t]he minority of high risks among the middle class uninsured may gain [from the ACA], but most uninsured will lose and, according to our estimates, will prefer to remain uninsured at the current penalty levels for violating the individual mandate.” According to their estimates, the ACA made a typical person without insurance who earns about $40,000 worse off by around $2,000 to $3,000.

The following table shows the projected enrollment distribution by income produced by the Urban Institute just one year ago compared to the actual enrollment distribution reported by the administration for 2015 and 2016. As the table shows, Urban expected 36% of enrollees to be below 200% of the FPL and 25% of enrollees to be above 400% of the FPL. It turns out that in both 2015 and 2016 a far higher percentage of enrollees are below 200% of the FPL and very few people with income above 400% of the FPL enrolled in an exchange plan.

The Congressional Budget Office also projected too many higher-income enrollees. Last March, CBO projected that 6 million of the 21 million projected exchange enrollees would have income too high to qualify for tax credits. It now appears CBO’s estimate of unsubsidized enrollees from last year was too high by at least a factor of four.

In addition to enrollees being poorer than expected, they are also older than insurers anticipated. During the 2014 open enrollment period, insurers reported that they expected only 18% of enrollees to be over the age of 55. In 2015, about 26% of enrollees were over the age of 55 and the early data for 2016 indicates that 28% of enrollees are over the age of 55. Older people tend to have more expensive health conditions than younger people and the ACA prohibited insurers from properly pricing for that difference. This means insurers had to enroll enough young enrollees to cross-subsidize artificially low premiums for older enrollees—but this has not happened.

Large Insurer Losses and Growing Need to Replace the Law

The best evidence of poor risk pools are the large aggregate losses suffered by insurers selling exchange plans. This has led several insurers to collapse, and others, including large ones like United and Cigna, to question whether they will continue offering exchange plans. It has also led to insurers like Anthem, Aetna, Cigna, and United—apparently burned by the administration’s allowance of people to enroll during special enrollment periods without proper verification in 2014 and 2015—to stop paying commissions to brokers who enroll people outside of the open enrollment period.

In sum, the ACA is not doing nearly as well as was predicted six years ago. As documented in a Mercatus study released this week, the ACA has almost certainly caused overall health care costs to increase even as exchange enrollment this year will likely amount to less than half of initial expectations. The main coverage gains have occurred through Medicaid, a program that economists at MIT, Harvard, and Dartmouth recently found delivers enrollees with only 20 to 40 cents of value for each dollar of government spending. It is becoming increasingly clear that the next Congress and administration may have no other choice but to significantly repair, if not replace, this law.