Donald Trump wants Obamacare to implode. That’s not a mischievous inference from his legislative misadventures; that’s a direct quote. “As I said from the beginning, let ObamaCare implode, then deal. Watch!”
It’s thus somewhat surprising that on his watch, enrollment currently seems to be on track for its best year ever. In the first four days, 601,462 people signed up for insurance through the federal marketplace, a significantly faster pace than in earlier years. And almost a quarter of them were new to the exchanges.
This is probably not what you expected. It’s not what I expected. Premiums are rising, insurers are pulling out, and the administration seems somewhat uninterested in encouraging people to enroll, having shortened the open enrollment period and defunded the cost-sharing subsidies for low-income enrollees.
Nonetheless, open enrollment seems to be going swimmingly. So let me attempt to answer the question that is probably at the forefront of your mind: “What the hey?”
Four days of data, however fascinating, are not quite enough to draw definitive conclusions. But I can outline some factors that could be contributing to this unexpected spike in enrollment, and what that suggests for the future of the troubled program.
The first possibility is that the very failures in the exchange are, perversely, making it more attractive. Hear me out.
In short, the premium increases have fallen especially heavily on the “benchmark” plans, which are the second-lowest-cost Silver plan available on a given exchange. Premiums for Bronze, Gold and Platinum plans have also gone up, but not so much. But because the premium subsidies are calculated based on that benchmark plan, this has the odd side-effect of making the other plans more attractive, at least to folks who are eligible for a subsidy. For many of the subsidy-eligible, the cost of a Gold plan, which covers 80 percent of expected health-care expenses, may actually be cheaper this year than it was last year, not because the cost of the plan fell, but because the subsidies rose so much. And many young and healthy people will be able to get a Bronze plan, which covers 60 percent of “actuarial value,” for practically peanuts.
There are other ways in which all the adversity that the exchanges have faced this year may actually have boosted them. For example, we could be seeing the Streisand Effect.
In 2003, singer Barbra Streisand noticed that there were photographs of her Malibu mansion available on the internet. Her frantic quest to get those pictures removed not only failed to quash the images, but notified a previously unsuspecting public that they existed. Many, many more people looked at images of that house than would have if she’d just kept her mouth shut and quietly enjoyed her stunning view.
Similarly, the last year of high-profile attempts to repeal Obamacare may have reminded folks that Obamacare exists. That seems like a crazy theory to anyone who follows politics closely -- but if you go venture outside certain wonk-dense enclaves, you quickly realize that most people don’t follow politics that closely, or indeed, much at all. Many people may have been too wrapped up in their daily lives to pay much attention to open enrollment, but having seen “Obamacare!” splashed across the news for six months, finally decided to check it out when the exchanges opened for business.
A related theory is the “#Resist” factor. Trump’s opposition has been operating at a high emotional frenzy for almost a full year, flooding social media with anything they can think of to undermine the president’s agenda. That includes reminders about open enrollment, which anecdotally, have been much more prominent in my newsfeed than they had been in earlier years. All those reminders floating around may finally have gotten health care stragglers to log in to Healthcare.gov.
To this we may add a phenomenon known as the endowment effect. Psychologists have noticed that once people have something, they value keeping it more than they valued getting it in the first place. This is demonstrated by experiments where, for example, people say they would be willing to pay only a modest sum to purchase a coffee mug on offer -- but demand a much larger amount to sell a coffee mug they have just been given.
The threat to take Obamacare away may have triggered the endowment effect in Americans' minds. This would explain why the public’s opinion of the program dramatically improved once Republicans took office and promised to make good on their vow to repeal it. And that “strange new respect” may also have made people more interested in actually signing up.
On the other hand, perhaps they’re just afraid that Obamacare will go away next year. So they’re making darn sure to sign up this year -- and get as many treatments as possible, in case the exchanges die. We’ve seen signs of similar strategic gaming in earlier years: people who signed up, used a lot of services, and then cancelled their policies, leaving insurers on the hook for bills that were far in excess of any premiums collected. If this is a factor, expect to see that insurers are, once again, losing bunches of money in 2018 … and that even fewer of them are willing to come back for the 2019 season, leading to even higher premiums and fewer coverage options next year.
And then, of course, there is the most prosaic possibility: Sign-ups have gone up in the first week of enrollment because the enrollment period is shorter this year. Conscious of the looming deadline, perhaps a lot of people have decided to get enrollment out of the way, so that they don’t risk missing the window.
Which of these theories is right? Well, none of them is mutually exclusive, so it’s possible that all of these things are playing into the higher enrollment numbers. Around about Christmas of this year, we’ll have a better idea whether this represents a new high for the exchanges, or just slightly condensed business as usual.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of “The Up Side of Down: Why Failing Well Is the Key to Success.”
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