40 Percent Of Enrollees Through eHealth Website Are Young Adults

Whether enough young people are signing up for insurance coverage under the health law remains a point of debate among its critics and supporters. Now both sides have some new data.

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Private online marketplace eHealth reported that the percentage of people between the ages of 18 and 34 who applied for coverage through the firm’s website in the last quarter of 2013 was well above the 25 percent rate cited by the Obama administration for enrollments through sites run by the states and the federal government.

During a call with Wall Street analysts Thursday, eHealth CEO Gary Lauer said 40 percent of the 169,000 consumers who used the site to obtain insurance from October through December were in the young adult category, “a highly sought-after demographic.”

The eHealth figures – released in a fourth-quarter earnings report – offer the first broad glimpse into the shopping habits of consumers who are seeking individual market policies, but avoiding the government websites that had a rocky launch this fall.

The firm, which offers a variety of plans and collects commissions from insurers, saw a big jump in applicants during those months as open enrollment under the health law began.

About half of its applicants sought coverage that began in 2014, when many of the law’s requirements took effect. Still, about half of all consumers applying through eHealth wanted plans that became effective in 2013, thereby ducking those requirements and any costs added as a result.

Only 10 percent were existing eHealth customers applying for new coverage because their old plans had been discontinued, Lauer said during the call. Analysts said that number seemed low, given the number of so-called canceled policies nationwide, but eHealth said its figure did not include customers whose policies were discontinued and who re-enrolled in a plan with the same insurance carrier.

“This is the most detail we’ve gotten about what the mysterious off-exchange market is looking like,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

The data on the young adult signups “is at least some indication that if we look at the risk pool as a whole, the demographics may look better than the exchange numbers alone would suggest,” he said.

Previously, the most detailed information about signups has come from government reports on the online markets run by states and the federal government, where about 25 percent of the 3.3 million enrollees have been young people.

Those websites are the main place where people who qualify for federal subsidies are shopping for coverage, with about 80 percent of enrollees qualifying for some kind of assistance.

Supporters of the law want to see a significant percentage of young or healthy people signing up for coverage in the new marketplaces to balance out the higher costs of the sick who can no longer be turned away by insurers.

Levitt and others say the eHealth numbers need to be kept in perspective. First of all, the total number of young applicants – about 72,000 — is small in comparison with the 807,000 young people who signed up through government websites through Feb. 1.

And the percentage of young people applying through eHealth was nearly identical to what the firm saw in the fourth quarter of 2012 – a year before most of the health law’s rules kicked in.

Policy wonks were stumped as to why the private site – which is not currently processing applicants who qualify for government subsidies – would see such a high percentage of young people. An estimated 9 million young people, earning somewhere between $11,500 a year and $46,000, could be eligible for subsidies, according to the advocacy group Young Invincibles.

EHealth is approved to process subsidy-eligible people, but hasn’t yet done so online, Lauer said, because the federal site is still not working satisfactorily.

He suggested that eHealth attracts tech-savvy young people who prefer it over the government sites. Even more young people – and applicants overall – might have used the site if it could process subsidies, although they could still apply for a tax refund when they file their 2014 returns.

Lauer said eHealth expects to be able to process subsidy requests online during open enrollment for 2015.

Another frequently raised question is how many of the 3.3 million who have signed up through the government exchanges have actually paid their first month’s premium bill.

Data from the eHealth earnings report may provide a clue.

In 2013, only 55 percent of applicants at the eHealth website were eventually approved for coverage, according to a report by analyst Carl McDonald at Citi Research. Some of those who didn’t get approved were likely rejected by insurers because they had medical problems, but how many changed their minds or simply didn’t pay?

This year – when rules bar insurers from rejecting applicants with medical problems, eHealth still forecasts that only 70 percent will gain approval.

So that means about 30 percent of those who have signed up so far might ultimately not enroll— likely because of  issues, such as failing to pay, changing their minds after applying or not filling out their forms correctly.

Whether that percentage proves true in eHealth — or in the federal and state exchanges — remains to be seen.