To start, it’s common for insured people to have no claims in a year; not everyone needs care. Is the 35% figure for individual market enrollees unreasonably high, as claimed?

Using the MEPS, I estimate that about 15% of non-elderly people with 12 months of group coverage in 2022 had no medical spending, even though no one thinks phantom enrollees exist in the group market.

And, as others have noted, there’s good reason to expect the individual market rate to be *much* higher: individual market enrollees are typically enrolled for only part of the plan year. Fewer months enrolled mechanically means fewer chances to incur claims.

Concretely, other CMS data show Marketplace enrollment spells averaged only ~8 months in the FFM states in 2024. That’s enough to explain much of the difference between CMS’ estimate of the individual market no-claims rate and my 15% group market estimate.

Here’s the math. Suppose enrollees have a 14.6% chance of generating a claim each month. I’ve chosen this percentage so that if a person was enrolled for 12 months, they’d have a 15% (= [1-0.146]^12) chance of having no claims, matching my group market estimate.

Now suppose that the exact same enrollees were enrolled for only 8 months (the FFM average). In that case, we’d expect 28% (= [1-0.146]^8]) to incur no claims.

There are lots of ways one could refine this calculation, but refinements could actually make the effect of enrollment duration differences larger. What’s clear is that duration matters *a lot*. Plus there could be other big differences between the individual & group markets.

Bottom line: it’s unsurprising that the individual market has a sizeable no-claims rate, especially given its relatively short enrollment durations. Given that, these data do not provide persuasive evidence that “phantom” enrollments are widespread.

Some have also highlighted the fact that the share of enrollees without claims rose substantially from 2020 to 2024. But that’s exactly what we’d expect in a period where enhanced subsidies attracted many (real) new enrollees into the market.

Prior research has found that subsidy expansions tend to pull in enrollees who use less care—and are thus less likely to incur claims—than those already in the market. For particularly high-quality evidence on this point, see: https://www.aeaweb.org/article...

There’s also another serious flaw in the arguments being made by @WSJ and @BrianBlase: even if there were lots of phantom enrollees, health insurers wouldn’t “get the benefit,” and it wouldn’t impose the claimed large costs on the federal government.

In particular, the “tens of billions” cost estimate they both cite appears to be derived by assuming that the presence of phantom enrollees would result in additional federal subsidy payments and no other changes. That assumption is indefensible.

To see why, suppose there were a surge of phantom enrollees into the market. Total claims spending in the market would remain the same, but *per enrollee* claims spending would fall. Premiums would follow, and, by design, Marketplace subsidies follow premiums.

So the gov’t would pay for more enrollees but pay less for each one. On net, federal costs would likely rise only slightly, and mainly because there would be a modest cost shift from unsubsidized enrollees (whose premiums fall) to the gov’t, not because insurers got a windfall.

To sum up, I’m not saying there are zero “phantom” enrollees in the individual market. But the data cited do not show that the problem is widespread, and even if the problem were widespread, it would not have the fiscal consequences claimed. /end

Edit: Tagging the right @brian_blase.

@brian_blase This correlation is also consistent with the view that enrollment duration can matter a lot for the zero claim rate: https://x.com/jgmcglamery/stat...

@MattAFiedler @davidmwessel @WSJ @BrianBlase 2) of screenings and just regular tat might catch some thing that could turn out to be disasterous and costly. People who say I healthy, I don’t want to pay for insurance end with expensive medical issues or accidents that bankrupt them. Insurance be value for money.

@MattAFiedler @davidmwessel @WSJ @BrianBlase You know what, the point of having insurance to have it when you need it, not to go to the doctor for things that do not need a doctors advice. Having copays and coinsurance is how the insurers try to get patients to think first. Unfortunately, too many people do not take 2)