July 18, 2013 in The Atlantic

by Garance Franke-Ruta

Only half the nation’s governors have signed onto the Medicaid expansionunder the Affordable Care Act and the bill’s employer mandate has been delayed for a year, but the White House remains confident about its ability to make the state-based insurance exchanges that are a central part of the Obamacare roll-out a success.

In this, its optimism is reminiscent of that of the Obama reelection campaign during the late summer and fall of 2012, when the people running the microtargeting and ground operations expressed assurance about their efforts even in the face of polls that raised doubts about the president’s prospects. That’s not too surprising, as the White House team conducting the roll-out in conjunction with the Department of Health and Human Services involvespollster David Simas, the former director of opinion research for the president’s reelection campaign and since earlier this year a top communications and strategy aide in the White House. He is now operating with similar Census-tract-by-Census-tract targeting care to figure out how to find and sell insurance to uninsured 18-to-35-year-olds who want coverage and are eligible for subsidies under the new law, which goes into effect on January 1.

The exchanges, or Health Insurance Marketplaces, are regulated, competitive regional markets that offer a range of plans that meet certain baseline standards, into which people will be funneled through a central website and application form. The key to getting them up and going is enrolling enough healthy people between 18 and 35 to make the risk pools work and keep rates competitive for the older, sicker people who will be drawn to the new insurance options. Insurers need young healthy people in the pool to keep rates lower for everyone; if only older, sicker people buy insurance at the outset, the calculus behind expanding health-care coverage through a private-sector market falls apart, because rates won’t stay low enough for ACA subsidies to help low- to low-middle-income people afford insurance long term.

Here’s how the White House expects this to go, according to a recent briefing by Simas and conversations with other White House officials. All numbers are from a PowerPoint developed by Simas, unless otherwise specified.

* The vast majority of Americans already have health insurance, primarily through their employers.

* But there are 15.4 people in the individual insurance market, and there are 40 million people who are uninsured.

* These are the people who presumably would be open to turning to the health-insurance exchanges to seek either better options for insurance, or novel insurance options.

* The first year enrollment target for the exchanges nationwide is 7 million, to be enrolled between October 1 of this year and the end of March 2014.

* For the marketplaces to work, 2.7 million of those 7 million applicants have to be between 18 and 35.

Of the uninsured between 18 and 35, 57 percent are male, and 43 percent are female. Almost all — 96 percent of them — have no chronic conditions (compared only half of those between 55 and 64). Slightly over half of them are minorities — 52 percent — and 48 percent are white.

Of those between 18 and 34 who don’t have insurance, cost is the main reason preventing them from having it, stymieing 52 percent, according to June’sKaiser Health Tracking Poll. Only 17 percent of the uninsured in this group say they simply chose not to get insurance.

A third of the uninsured have to be enrolled in just three states — California, Florida, and Texas — to hit the national number targets, but the risk pools have to be balanced internally in every state, since these are state-based markets. For the purposes of building the risk pools, it doesn’t matter whether or not a state has accepted or refused the ACA’s Medicaid expansion, because there are enough uninsured people eligible for insurance subsidies — the tax credits provided for by the law — that even without the Medicaid expansion, the numbers can be met if about 20 to 25 percent of the cohort of uninsured, credit-eligible 18-to-35-year-olds can be signed up for the exchanges. (There are 19 million uninsured between the ages of 18 and 34, according to the advocacy group Young Invincibles, about 9 million of whom are likely subsidy-eligible.) The exchanges will be open in every state and the District of Columbia.

Again: The entire 2.7 million 18-to-35 cohort could be made up of people eligible for subsidies. It also could be made up entirely of minorities. It could even be made up entirely of women (only 11 percent of whom say they choose not to have insurance, compared to 22 percent of men). The size of the uninsured 18-to-35-year-old population is large enough in comparison to the first-year enrollment goal that any talk of sabotage by healthy young people refusing to sign up because of political opposition to the law is laughable. The cohort could even be made up almost entirely of people who live in cities — cities governed by Democrats who have an interest in making sure their constituents get access to the new federal program. In Texas, that means people like the mayors of Dallas, Houston, and San Antonio.

Messaging on the exchanges will be rolled out through media that’s been determined to be likely to reach the uninsured, such as: Galavision TV (a division of Univision), BET, MTV, G4, Spike, Oxygen, Style, and women’s magazines, such as Cosmopolitan, which has the largest circulation in the category. It will involve six months of targeting of pockets of the uninsured in 19,000 American cities and their surrounding areas. Women — moms and girlfriends — are expected to be critical drivers of opinion on enrolling in the new plans, as women are already one of the major forces behind men taking the time to go to the doctor, lose weight, get that mole checked out, and so on.

The central messaging will involve cost, since that’s been the biggest stumbling block for the uninsured: finding a plan to fit your budget. Because there are no longer any pre-existing condition bans, there will no longer be an underwriting period when people apply for insurance. The enrollment website will show people the cost of each plan in their area, the amount of federal subsidy they are eligible for, and the final discounted price they would pay per month, depending on what plan they choose.

Republicans have expressed concern that without the employer mandate and income-verification requirements, implementation of which have been delayed,the subsidy enrollment system is open to fraud, but supporters of the bill insist than any discounts people get that they are not eligible for will result in a bill from the IRS on the other end.

The White House and Obamaland folks have previously made a lot of predictions. Some of them — like Joe Biden’s off-the-cuff 2010 prediction that there’d soon be 250,000 to 500,000 jobs created per month — have turned out to be wildly off the mark. Others, like the more data-driven predictions about the 2012 election, have been remarkably accurate. It will be interesting to review the hopes of July 2013 in the spring of 2014, and see which category the current ambitions fall into.

Even if 2.7 million young people do enroll and 7 million enroll overall, there will be tens of millions of uninsured as the administration heads into year two of the meat of the Obamacare roll-out. The White House keeps saying that the new health-care law will become more popular as more and more people begin to benefit from it. But it’s an open question whether the pace at which it’s realistically possible to transform the health insurance system is fast enough to make that opinion shift happen any time soon.