Reform Update: Jan. enrollment surge seen as sign of recovery from bungled Obamacare launch

Enrollment through the state and federal insurance exchanges topped 1.1 million in January, providing further evidence that the marketplaces have largely recovered from the bungled Obamacare launch.

The continued brisk pace of enrollment is particularly notable because many experts anticipated a significant drop-off in signups during January. That's because many people with significant health problems scurried to select a plan by the end of December so that they could have coverage at the start of 2014, experts say.

During the first four months of the open enrollment period, nearly 3.3 million individuals signed up for coverage, according to figures HHS released this week. That includes 1.9 million through the federal HealthCare.gov website and 1.4 million through the state-run exchanges in 14 states and the District of Columbia.

The new tally is more than halfway toward the Congressional Budget Office's recently downgraded projection of 6 million enrollments by March 31, though the pace of enrollments is still 25% behind CMS projections. (Originally the CBO had projected 7.1 million enrollments by March 31.) But for the first month since the exchanges opened for business on Oct. 1, enrollments in January topped expectations. States varied widely in achieving projected enrollment, with Connecticut far exceeding its target and Massachusetts falling far short.

“I don't think anybody expected January would be quite this strong,” said John Holahan, a health policy expert with the Urban Institute. “You can't see it as anything other than a pretty good sign.”

Momentum was particularly strong for the federal exchange. Nearly 40% of all enrollments through HealthCare.gov occurred last month. For the state exchanges that figure was roughly 30%.

The positive enrollment news for the Obama administration comes with potentially major caveats. HHS has not released data on how many enrollees have made their first premium payment. That likely means that a significant number of consumers who selected a plan through the online marketplaces aren't actually covered. The New York Times reported that about 1 in 5 applicants did not pay their premium on time and therefore did not receive coverage in January.

“These figures that HHS is putting out are padded,” said Seth Chandler, an insurance expert at the University of Houston Law Center.

In addition, no comprehensive numbers have been released showing how many of the individuals who signed up for coverage were previously uninsured. A study by McKinsey & Co. looking at the first 15 weeks of enrollment found that just 11% of enrollees were previously uninsured. But some experts say that's misleading because coverage typically was unstable in the pre-Obamacare individual market.

Whether the enrollment momentum will continue through March 31 remains to be seen. Chandler says predictions hinge on whether you think everyone who wants insurance already has signed up or whether you believe there will be another deluge of signups before individuals face a tax penalty for failing to enroll by that deadline.

Just five states—California, Connecticut, Kentucky, New York and Washington—received top marks for exchange implementation on a new report card issued by the consulting firm Decision Resources Group. By contrast, more than a third of the states got failing grades. States were judged on the number of enrollments, the level of competition and the adequacy of their preparations. States that created their own exchanges typically received higher scores. But Maryland and Oregon were two notable exceptions, with each received failing grades for building websites that remain dysfunctional. Bill Melville, the report's author, suggests that the states that bungled the rollout of the online marketplaces typically tried to do too much in the first year of implementation. “It just kind of blew up in their faces,” he said.

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