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Where Have All the Uninsured Gone?

By Megan McArdle
January 21, 2014 4:34 PM EST
Photographer: Andrew Harrer/Bloomberg
Photographer: Andrew Harrer/Bloomberg

My last column referred in passing to a surprising fact that came out of last weekend's Wall Street Journal: Somewhere between 65 percent to 90 percent of the 2.2 million folks who bought insurance on the exchanges through late December seem to be people who already had insurance. Some came to the exchanges when their policies got canceled; others came, voluntarily or not, from the employer market. But various sources suggest that the number of previously uninsured people who have so far bought policies on the exchanges is somewhere south of 750,000.

To put that number in perspective, the Congressional Budget Office projected that the exchanges would sign up 7 million people in the first year, roughly 2 million of them transitioning from other insurance plans and 5 million of them previously uninsured. If the Journal’s numbers are right, then by the end of December, the exchanges had signed up at least 1.45 million previously insured folks out of the 2 million who were projected to enroll by the end of May -- roughly 75 percent of the projected total. But at most, they’ve signed up 15 percent of the uninsured that they were expecting to enroll. You’d expect the early numbers to be somewhat weighted toward the previously insured, who probably want to maintain continuous coverage. Still, this is a fairly wild skew, and it leaves us with a burning question: Where are the uninsured? Did hardly any of them want coverage beginning Jan. 1?

U.S. Census figures say that 45 million people go without insurance every year in this country. To be sure, some of those are undocumented immigrants, who are unlikely to show up at a government-run exchange; others are legal residents who may not be eligible for subsidies. But where are the rest? We just created a giant new entitlement to take care of these people. Why aren’t they showing up to take advantage of it?

One answer is that some have gone to Medicaid. The administration says that states signed up 4 million Medicaid patients by Dec. 1. But as Sean Trende has pointed out, there is less there than meets the eye; states sign up millions of people for Medicaid every month. So far, the administration has not been able to ascertain how many of the new signups represent folks who became eligible because of the Patient Protection and Affordable Care Act, or even whether these are new signups, rather than renewals of previous Medicaid coverage.

Still, we don’t have the December numbers yet; if they show the same sort of spike that the private exchanges have, we may have had a sizable bump in coverage in December that we don’t yet know about. But unless the spike was truly amazing, that still leaves us looking for tens of millions of uninsured people. Where are they? And what are they waiting for?

Maybe they were buying insurance directly from the insurance companies. But industry expert Bob Laszewski seems to say no, that’s not the case: “This is consistent with anecdotal reports from insurers I have talked to that are seeing very little net growth in their overall individual and small group markets as of January 1.”

That leaves us with two possibilities: First, would-be applicants may simply be waiting until March. They’ve gone without insurance a long time; why not wait a few more months and save on premiums?

The second possibility is more troubling: There may be something seriously wrong with our understanding of who the uninsured are, and what they are willing and able to buy in the way of insurance. I don’t know exactly what the fault may be in our understanding. But if the numbers stay this low, I’d say we need to reassess the state of our knowledge about the uninsured -- and the vast program we created to cover them.

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