Just want to highlight two reports on the characteristics of the early Exchange enrollees and their healthcare utilization patterns. The first is from the Society of Actuaries (they truly know how to let loose at a convention…) as they looked at “pent up demand” for very nice to have but not critical to life services for people who became newly insured in 2014.
The demographics are different for the two groups, and this reinforces the need for further study beyond this initial glance.
• The gender split for new enrollees is 56 percent female, while the continuously enrolled population is
48 percent female.
• The average age for new enrollees is 37, while that of the continuously enrolled is 34…..
While the utilization rate of services is about 50 percent greater, the expense to provide those services is
90 percent higher due to the use of care with higher per unit cost such as lower back pain treatment. The
total allowed costs for all preference-sensitive treatments, including incidentals on the associated claim, are
shown in Table 3. Newly enrolled members used $6 per member per month (PMPM) more in this care than
continuously enrolled members. As an estimate, there would be no more than 3 percent of increased overall
costs associated with preference-sensitive care.
The important take-away from the study is that the 1st Quarter 2014 risk pool was older and more female (which means more expensive) than the workforce insured risk pool as well as playing significant catch-up with more serious conditions.
The other interesting study was from Health Affairs as they looked at the changing composition of risk by enrollment month in 2014.
There was a decline in the mean age of enrollees by month of enrollment from 46.5 years to 42.2 years in the first five months of 2014,…Marketplace enrollees had very different starting levels of medication use depending on when they enrolled (Exhibit 2). In their first month of enrollment, January enrollees filled 0.86 prescriptions per member per month. Successive cohorts (by month of enrollment) had a lower mean number of fills in their first month of enrollment (0.72 for February enrollees, 0.69 for March, 0.61 for April, and only 0.46 for May). Each group experienced a substantial increase in medication use over the study period, although the groups enrolling in later months had consistently lower medication use than the early enrollees even by September 2014
What do these two studies tell us?
First, the most motivated, most known to themselves to be ill people were the first people in line to sign up for insurance. This is not unexpected. It was a core assumption of basically every enrollment model. Sick people would jump in first, and healthy people would jump in just as the buzzer was going off. But it is nice to see the confirmation.
Secondly, the prescription data shows a pool that is getting healthier as time goes on. This is why a mandate or some other type of participation enforcement mechanism is needed for PPACA to work.
Finally, the most important question is not what does the difference in per person spending between new enrollees and employer covered individuals means, but what is the difference in spending between reality and the projected for the new enrollees. That difference is what is being used to drive pricing decisions for 2015 and 2016. And that is not being answered right now.