Insurers say the early buyers of health coverage on the nation's troubled new websites are older than expected so far, raising early concerns about the economics of the insurance marketplaces.
If the trend continues, an older, more expensive set of customers could drive up prices for everyone, the insurers say, by forcing them to spread their costs around. "We need a broad range of people to make this work, and we're not seeing that right now," said Heather Thiltgen of Medical Mutual of Ohio, the state's largest insurer by individual customers. "We're seeing the population skewing older."
The early numbers, described to The Wall Street Journal by insurance executives, agents, state officials and actuaries, are still small—partly a consequence of the continuing technical problems plaguing the federally run exchanges, experts say. HealthCare.gov, the federally run marketplace serving 36 states, is suffering serious technical problems that have prevented many people from signing up.
But the numbers demonstrate a real-world fallout from the digital snafus: Less-healthy customers are more likely to persevere through technical obstacles to gain coverage, insurers say. Younger, healthier customers who feel less need for insurance—but whose widespread participation is important to the financial success of the system—could be quicker to give up.
The average enrollee age at Priority Health, a Michigan insurer, has ticked up to age 51 for newcomers, from about 41 years old for plans offered for the current year, said Joan Budden, chief marketing officer. Arise Health Plan, Wisconsin's largest nonprofit insurer, said more than half its 150 signees are over 50, a higher proportion than expected, while declining to be specific on its target age.
Industry experts cautioned that, a month into the health law's enrollment period, it is too soon to say what insurers' final pool of members will look like. Medical Mutual, for instance, has seen health-law enrollments so far in the "low triple digits," and Priority Health has seen fewer than 100. Both are selling on the federal exchange.
A White House official said the Obama administration expects most young, healthy enrollees to wait until the last minute to sign up, citing research showing that pattern when Massachusetts embarked on a similar health overhaul in 2007. People have until Dec. 15 to enroll in coverage starting Jan. 1, with open enrollment for coverage during the year lasting through next March.
In states that are running their own marketplaces and have seen smoother rollouts, officials are now also reporting a similar phenomenon, suggesting the economics of the law play a role, too. In Connecticut and Kentucky, which have enrolled more than 4,000 people each in private health plans so far, the largest segments of enrollees in new commercial health-law plans are over age 55, much older than industry actuaries say they had anticipated. Each state ultimately expects to register several hundred thousand people in their exchanges.
Age expectations for enrollees vary by market, but one adviser and several insurers said an average age of around 40 would be a typical target.
The more difficult it is for a person to sign up, "the more danger there is of having a bad risk pool," said Jim Whisler, an actuary for Deloitte Consulting LLP, which advises health plans participating in the marketplaces. "Indications to date are that that is playing out," he said.
The law bars insurers from charging sicker customers higher rates, and limits the amount they can charge older people compared with younger ones. It offers new subsidies to help cover premiums available to many lower-income applicants. Insurers are relying on a steady stream of younger, healthier enrollees to offset medical bills of older, sicker customers.
"The more sick people who do enroll, the more exposed [insurers] become," said Jim O'Connor, an actuary for Milliman Inc., a consulting firm.
The law includes provisions to ease the risks insurers face. For instance, federal funds will reimburse insurers for certain losses if they underestimate costs. But, actuaries say if the overall pool of customers is significantly older than expected, those provisions may not be enough to protect insurers against losses.
Technological obstacles won't deter patients like Marian Furst, a 63-year-old from suburban Salt Lake City. Ms. Furst, whose current health plan is closing at the end of the year, receives a $5,260-a-month course of treatment for an immune-system disorder.
That means the odds that she will keep going back to the troubled federally run website, HealthCare.gov, are "100%," she says. Ms. Furst created an account on the morning of Oct. 3. She has been trying to log in every few days since, though she hasn't succeeded yet.
The website problems have attracted a backlash in Washington, where Republican lawmakers, and some Democrats, have called for an extension of the enrollment period, which ends in March, or a delay of a crucial health-law requirement that people obtain coverage next year or pay a tax penalty.
"There has to be a sufficient window for citizens to be able to exercise their judgment in signing up," Sen. Jeff Merkley, an Oregon Democrat, said last week.
Either approach could reduce the incentive for healthy people to get coverage, meaning insurers would have to increase rates next year "to account for fewer young and healthy people signing up for coverage," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans.
"With nearly half of single, Marketplace-eligible uninsured young adults able to get coverage at $50 or less per month, the health care law is delivering the quality, affordable coverage people are looking for," said Joanne Peters of the Department of Health and Human Services, referring to recent research by the department.
So far, the young have remained elusive. At a health-law education event in North Carolina last week, more than 100 people, mostly in their 40s and 50s, came. "I actually didn't see a single young person," said Liz Gallops, an insurance agent from Raleigh, N.C., who attended.
In Kentucky, nearly 40% of 4,631 enrollees in private health plans are over age 55, while 24%, including children, fall under age 34. A much higher portion of young people signed up for Medicaid plans, which some states are expanding under the law, state data show.
Many more people have applied for coverage, but not yet enrolled, and data showing their ages wasn't immediately available, said Gwenda Bond, a spokeswoman for the Kentucky marketplace. The rollout of that state's website has been relatively smooth compared with the federally run site.
Private plans are seeing an older clientele in Connecticut, too, said Kevin Counihan, CEO of Access Health CT, the state's marketplace. Mr. Counihan, a former Cigna Corp. executive, said he anticipated younger people will wait until the last minute to sign up.
WellPoint Inc., the largest insurer offering plans in Connecticut, said most of its enrollees in that state were between 55 and 64 in a recent call with investors. The insurer said it predicted an initial wave of enrollees might be older, but that it would increase efforts to woo younger members.
"To get the right risk pool, we need to do marketing," said Ken Goulet, president of the insurer's commercial and specialty division.
The early hurdles could leave insurers with a less profitable cast of enrollees next year, said Matthew Borsch of Goldman Sachs in a note last week to investors. Mr. Borsch, who earlier anticipated the industry would profit, now projects losses of "less than $100 million" on pretax 2014 earnings.
The people most helped by the law are the ones who represent the biggest challenge for insurers, since they may be highly motivated to sign up for coverage despite malfunctioning websites. Jennifer Olski, a 46-year-old freelance writer from Kimberly, Wis., has been unable to afford coverage on her $25,000-a-year income: As a survivor of bladder cancer now contending with two types of nerve disease, she faced high prices under the old insurance rules.
Now, she is looking forward to another chance to gain coverage. "When you need something this bad, it's going to be worth the wait, even if it's for another couple of weeks," she said.
Kristina Peterson contributed to this article.
If the trend continues, an older, more expensive set of customers could drive up prices for everyone, the insurers say, by forcing them to spread their costs around. "We need a broad range of people to make this work, and we're not seeing that right now," said Heather Thiltgen of Medical Mutual of Ohio, the state's largest insurer by individual customers. "We're seeing the population skewing older."
The early numbers, described to The Wall Street Journal by insurance executives, agents, state officials and actuaries, are still small—partly a consequence of the continuing technical problems plaguing the federally run exchanges, experts say. HealthCare.gov, the federally run marketplace serving 36 states, is suffering serious technical problems that have prevented many people from signing up.
But the numbers demonstrate a real-world fallout from the digital snafus: Less-healthy customers are more likely to persevere through technical obstacles to gain coverage, insurers say. Younger, healthier customers who feel less need for insurance—but whose widespread participation is important to the financial success of the system—could be quicker to give up.
The average enrollee age at Priority Health, a Michigan insurer, has ticked up to age 51 for newcomers, from about 41 years old for plans offered for the current year, said Joan Budden, chief marketing officer. Arise Health Plan, Wisconsin's largest nonprofit insurer, said more than half its 150 signees are over 50, a higher proportion than expected, while declining to be specific on its target age.
Industry experts cautioned that, a month into the health law's enrollment period, it is too soon to say what insurers' final pool of members will look like. Medical Mutual, for instance, has seen health-law enrollments so far in the "low triple digits," and Priority Health has seen fewer than 100. Both are selling on the federal exchange.
A White House official said the Obama administration expects most young, healthy enrollees to wait until the last minute to sign up, citing research showing that pattern when Massachusetts embarked on a similar health overhaul in 2007. People have until Dec. 15 to enroll in coverage starting Jan. 1, with open enrollment for coverage during the year lasting through next March.
In states that are running their own marketplaces and have seen smoother rollouts, officials are now also reporting a similar phenomenon, suggesting the economics of the law play a role, too. In Connecticut and Kentucky, which have enrolled more than 4,000 people each in private health plans so far, the largest segments of enrollees in new commercial health-law plans are over age 55, much older than industry actuaries say they had anticipated. Each state ultimately expects to register several hundred thousand people in their exchanges.
Age expectations for enrollees vary by market, but one adviser and several insurers said an average age of around 40 would be a typical target.
The more difficult it is for a person to sign up, "the more danger there is of having a bad risk pool," said Jim Whisler, an actuary for Deloitte Consulting LLP, which advises health plans participating in the marketplaces. "Indications to date are that that is playing out," he said.
The law bars insurers from charging sicker customers higher rates, and limits the amount they can charge older people compared with younger ones. It offers new subsidies to help cover premiums available to many lower-income applicants. Insurers are relying on a steady stream of younger, healthier enrollees to offset medical bills of older, sicker customers.
"The more sick people who do enroll, the more exposed [insurers] become," said Jim O'Connor, an actuary for Milliman Inc., a consulting firm.
The law includes provisions to ease the risks insurers face. For instance, federal funds will reimburse insurers for certain losses if they underestimate costs. But, actuaries say if the overall pool of customers is significantly older than expected, those provisions may not be enough to protect insurers against losses.
Technological obstacles won't deter patients like Marian Furst, a 63-year-old from suburban Salt Lake City. Ms. Furst, whose current health plan is closing at the end of the year, receives a $5,260-a-month course of treatment for an immune-system disorder.
That means the odds that she will keep going back to the troubled federally run website, HealthCare.gov, are "100%," she says. Ms. Furst created an account on the morning of Oct. 3. She has been trying to log in every few days since, though she hasn't succeeded yet.
The website problems have attracted a backlash in Washington, where Republican lawmakers, and some Democrats, have called for an extension of the enrollment period, which ends in March, or a delay of a crucial health-law requirement that people obtain coverage next year or pay a tax penalty.
"There has to be a sufficient window for citizens to be able to exercise their judgment in signing up," Sen. Jeff Merkley, an Oregon Democrat, said last week.
Either approach could reduce the incentive for healthy people to get coverage, meaning insurers would have to increase rates next year "to account for fewer young and healthy people signing up for coverage," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans.
"With nearly half of single, Marketplace-eligible uninsured young adults able to get coverage at $50 or less per month, the health care law is delivering the quality, affordable coverage people are looking for," said Joanne Peters of the Department of Health and Human Services, referring to recent research by the department.
So far, the young have remained elusive. At a health-law education event in North Carolina last week, more than 100 people, mostly in their 40s and 50s, came. "I actually didn't see a single young person," said Liz Gallops, an insurance agent from Raleigh, N.C., who attended.
In Kentucky, nearly 40% of 4,631 enrollees in private health plans are over age 55, while 24%, including children, fall under age 34. A much higher portion of young people signed up for Medicaid plans, which some states are expanding under the law, state data show.
Many more people have applied for coverage, but not yet enrolled, and data showing their ages wasn't immediately available, said Gwenda Bond, a spokeswoman for the Kentucky marketplace. The rollout of that state's website has been relatively smooth compared with the federally run site.
Private plans are seeing an older clientele in Connecticut, too, said Kevin Counihan, CEO of Access Health CT, the state's marketplace. Mr. Counihan, a former Cigna Corp. executive, said he anticipated younger people will wait until the last minute to sign up.
WellPoint Inc., the largest insurer offering plans in Connecticut, said most of its enrollees in that state were between 55 and 64 in a recent call with investors. The insurer said it predicted an initial wave of enrollees might be older, but that it would increase efforts to woo younger members.
"To get the right risk pool, we need to do marketing," said Ken Goulet, president of the insurer's commercial and specialty division.
The early hurdles could leave insurers with a less profitable cast of enrollees next year, said Matthew Borsch of Goldman Sachs in a note last week to investors. Mr. Borsch, who earlier anticipated the industry would profit, now projects losses of "less than $100 million" on pretax 2014 earnings.
The people most helped by the law are the ones who represent the biggest challenge for insurers, since they may be highly motivated to sign up for coverage despite malfunctioning websites. Jennifer Olski, a 46-year-old freelance writer from Kimberly, Wis., has been unable to afford coverage on her $25,000-a-year income: As a survivor of bladder cancer now contending with two types of nerve disease, she faced high prices under the old insurance rules.
Now, she is looking forward to another chance to gain coverage. "When you need something this bad, it's going to be worth the wait, even if it's for another couple of weeks," she said.
Kristina Peterson contributed to this article.
