Monday, March 31, 2014

RAND study shows 9 million signed up off exchanges - here's why that's relevant

Oh goody!!!!

So a RAND study is apparently coming out, and I’m still quite unclear on what it actually shows. The result Avik Roy is emphasizing is that ~1/3rd of those who bought on the exchanges were previously uninsured. I’m going to go ahead and assume that’s actually NOT true, and that either the study’s methodology was flawed or, more likely, the interpretation of the data was flawed. Obviously, this wouldn’t be the first time. Exhibit A: The infamous McKinsey study, which has been and continues to be erroneously cited as showing that only 27% of those buying on the exchanges were previously uninsured.

What I AM willing to accept, for now, is the additional finding the study supposedly reports, which is that NINE MILLION PEOPLE have bought off the exchanges. If you’ve read Charles Gaba’s multiple entries on the McKinsey study, and perhaps also my piece elaborating on off-exchange enrollments, you’ll know that understanding the McKinsey poll depends heavily on knowing how many people enrolled off the exchanges. I made an estimate that ~36% of people enrolled off the exchanges, but that was based purely on estimates from numbers reported by companies that have BOTH on- and off-exchange plans – this COMPLETELY IGNORED the reality that there are several HUGE companies (e.g. Aetna) selling plans ONLY off the exchanges.

Just as importantly, the McKinsey study oversampled the previously insured by ~2.4 (they chose 1,000 insured and 1,000 uninsured from a total population of 10 million insured vs. 24 million uninsured). This skews their results to be even more biased towards previously insured people. Based on that alone, we’d expect a lot more people to have been previously uninsured, but we can’t be certain since they apparently also tried to correct for other factors. The point is that it ISN’T a random sample. I’m guessing the RAND study wasn’t a perfect random sample either – I’ll keep you posted on that.

So, in any case, the number was likely to be much higher, but I preferred to stick with a “conservative” (nyuck nyuck) estimate.

Well that is no longer necessary. Now that we know that there were 9 million off the exchanges (assuming of course that the RAND study is correct in this), we can make some much better estimates of what the proportion of on vs. off exchange enrollments were, and thus estimate the number of previously uninsured people who enrolled on the exchanges. Let’s assume that the survey was taken very recently, say when on-exchange enrollment was 6 million. That means that there were about 67% of people buying off the exchanges. At the time of the McKinsey study, 27% of the people buying insurance were previously uninsured. That proportion had gone up from 10% the month before, and I think we can assume that the rate only continued to increase, especially in the last couple of days, but to be conservative (again), let’s assume that it stayed flat at 27%. That would mean that 73% were previously insured. 73% of 15 million (6 million on the exchanges, 9 million off the exchanges) is ~11 million. That means that ~4 million were previously uninsured. Now, the RAND study also said that the “vast majority” of those who bought off the exchanges were previously insured. I’m going to go ahead and assume that means 90%. This of course means that 10% (900,000) of those who bought off the exchanges were previously uninsured. Let’s round that up to 1 million. Subtracting 1 million from 4 million gives us 3 million previously uninsured people who bought on the exchanges. That puts us at 50% of those who bought on the exchanges were previously uninsured (exactly what Gaba predicted, by the way)!

Here’s the thing – I’m CERTAIN this is an underestimate. The fact is that a HUGE surge has happened in the last couple of days, and the majority of those signing up in that last surge are more likely than not to be previously uninsured.

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