Gender Gap Greater Concern To Insurers Than Low Young Adult Enrollment

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By Sara Hansard

Feb. 13 --Health insurers aren't alarmed by the relatively low enrollment of young adults in the Affordable Care Act marketplaces, but the heavy concentration of women over men might be a concern, industry consultants told Bloomberg BNA Feb. 13.

“There's been improvement in the numbers,” James O'Connor, a principal and consulting actuary in the Chicago office of Milliman Inc., told Bloomberg BNA. “The most noteworthy thing, though, is the gender difference.”

In a report released Feb. 12, the Department of Health and Human Services said that 55 percent of the nearly 3.3 million people who selected qualified health plans in the marketplaces from the beginning of open enrollment Oct. 1, 2013, to Feb. 1, 2014, are female and 45 percent are male. The first open enrollment period under the ACA lasts until March 31.

“You would expect something closer to 50-50,” O'Connor said. “Probably carriers may have assumed that more females would be coming in than males. But probably not a 10-point difference.”

Costs for Women Higher

The ACA bars insurers from discriminating against people based on gender as of 2014. Previously, women were charged more because their health-care costs are considerably higher than men's, particularly costs for women between the ages of 25 and 45, O'Connor said. “We see that a young female could be twice the cost of a young male,” he said.

In contrast, costs for older men, in the upper-50s or low-60s age bracket, are higher than for women of that age, O'Connor said. Nevertheless, health-care costs for women between the ages of 18 and 64 are 15 percent to 20 percent higher than for men on average, he said.

“The gender is skewed more female than I'd expected,” said Caroline Pearson, vice president of Avalere Health LLC and leader of the Washington consulting firm's Health Reform Practice. “We were expecting about 53 percent male just based on who's uninsured and eligible” to participate in the marketplaces, she said, noting that men are more likely to be uninsured.

However, Pearson said men may be more likely to procrastinate in enrolling, and the cost impact of the proportion of women to men in the marketplaces won't be severe because women's higher health costs are primarily in child-bearing years. “The child-bearing population is still a minority of exchange enrollees,” she said. “It will limit the impact of a female-heavy mix on pricing” of premiums.

The low portion of enrollees in the 18-to-34 age group has received much attention as young adults are needed to keep health costs, and premiums, low. The Feb. 12 HHS report said 25 percent of enrollees in the first four months of the marketplace open enrollment period were between the ages of 18 to 34, lower than the 40 percent target projected initially by the Congressional Budget Office and the Obama administration.

Chris Carlson, an actuary and principal in the Milwaukee office of management consulting firm Oliver Wyman, told Bloomberg BNA that young adult enrollment so far appears to be lower than young adult enrollment in the individual market prior to 2014. In 2011, 28 percent of the individual insured market was between the ages of 21 and 39, he said.

Carriers Expected Low Young Enrollment

However, Carlson said, “While it appears the young population is enrolling at lower rates, what's important is how it relates to what the actuarial assumptions were.” Comments from some carriers reflect that enrollees' ages fit with those assumptions, he said. The ACA prohibits insurers from charging older enrollees more than three times what young people are charged. Since older enrollees were previously charged as much as five times more, that has meant premium increases for many young adults who don't qualify for enough subsidies under the law to offset the difference.

“While it appears the young population is enrolling at lower rates, what's important is how it relates to what the actuarial assumptions were.”
--Chris Carlson, actuary and principal at Oliver Wyman

Moreover, the share of people ages 18 to 34 enrolling in the marketplaces increased to 27 percent in January, a 3 percentage point increase over the previous three-month period, the HHS said. “It's going in the right direction,” Carlson said.

In a Jan. 29 conference call on fourth quarter 2013 earnings, WellPoint Inc. Chief Executive Officer Joseph Swedish said, “The average age of individual customers is closely tracking expectations,” according to a transcript. “We anticipated that exchange enrollees would generally be older than our legacy individual customers. And our pricing assumptions for both on- and off-exchange products reflected this view.” WellPoint is one of the most active health insurers in the ACA marketplaces.

In Aetna Inc.'s fourth quarter 2013 earnings call on Feb. 6, Chairman and Chief Executive Officer Mark Bertolini also said of Aetna's exchange enrollment, “As it relates to the risk in the pool, the demographics are about where we thought they would be,” according to a transcript provided to Bloomberg BNA.

Changes in Risk Programs a Problem

However, if changes were made to the ACA's risk adjustment programs, that might cause problems for insurers, Carlson said.

Legislation that would repeal the risk corridors program, which provides money to insurers who suffer higher than expected losses, has been introduced in Congress by Sen. Marco Rubio (R-Fla.), and some House Republicans have pointed to a recent Congressional Research Service memo as an indication that Congress would have to appropriate money for the program . Republican opposition to the ACA may make it difficult to approve an appropriation.

Making changes to the ACA's risk adjustment programs “in the middle of open enrollment--after premiums have been set and consumers have begun to enroll in coverage--would cause disruptions in the market and higher premiums for consumers.”


--Robert Zirkelbach, AHIP

If money from the program isn't forthcoming as expected by insurers, “It may make them more conservative in their decision as to whether they want to be in the exchange or not,” Carlson said.

In an e-mail to Bloomberg BNA Feb. 13, Robert Zirkelbach, spokesman for America's Health Insurance Plans, said, “Given uncertainty about who will purchase coverage in the new marketplaces, the reform law includes temporary premium stabilization programs to help provide stability and predictability for consumers as these new reforms are implemented. Making changes to these programs in the middle of open enrollment--after premiums have been set and consumers have begun to enroll in coverage--would cause disruptions in the market and higher premiums for consumers.”

In the Aetna earnings call, Bertolini said the company expects its marketplace business “to actually have a negative impact on our earnings, and that's built into our guidance for 2014.”

Aetna spokesman Matthew Wiggin told Bloomberg BNA in a telephone interview that the risk corridors program and two other risk adjustment programs--known as the “3 Rs”--were included in the ACA to provide an incentive for plans to participate in the marketplaces. “The issue that we're looking at is that if you remove the 3 Rs prematurely, it could increase costs for taxpayers through higher premiums and costlier subsidies,” he said.

Child Enrollment a Surprise

Another surprise in the enrollment data is the low number of children under the age of 18 covered in the marketplace plans, O'Connor said. “It's coming in at 5 percent of the total,” he said. While some children are probably qualifying for coverage under Medicaid and the Children's Health Insurance Program, “We generally would expect more children coming in to the individual markets along with the parents.”

While health-care costs for infants before the age of 1 is higher than for other ages, health-care costs for children are low on average, O'Connor said.

It isn't clear what the implications are for the low number of child enrollees, O'Connor said. In addition, he said, what isn't yet known is “are we getting more unhealthy people than is represented in the population. That's really a key to how successful the program will be.” Insurers participating in the marketplaces must propose premium rates in May for 2015, so they will have to rely on demographics rather than claims experience, he said.

Pearson found some of the state data to be unexpected. Republican-leaning states where opposition to the ACA has been high--such as North Carolina and Florida--“are doing relatively well in terms of enrollment,” she said. The marketplaces in those states are run by the federal government rather than by the states themselves.

The relatively high enrollment there is “a good sign that it seems like the federal exchange states are catching up,” she said.

Avalere published an analysis Feb. 13 titled “State Exchange Enrollment Widely Variable Compared to Projections.”

To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Janey Cohen at

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