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Number of Obamacare enrollees rises, but don’t break out the champagne yet

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The government has announced that more than 1.1 million Americans signed up for health insurance in January through the federal and state exchanges established by the Affordable Care Act. In particular, the number of young people who enrolled increased faster than any other demographic, according to The New York Times.

The figures were good news for a White House that has been battered by a series of glitches, misstatements and political miscalculations regarding Obamacare since its rocky roll-out Oct. 1. Part of the administration’s angst regarding the law has been that, initially, fewer younger, healthier Americans have signed up than anticipated, leaving officials concerned that costs would soar beyond initial expectations.

According to figures released by the Department of Health and Human Services, one-quarter of new enrollees from October through January were between the ages of 18 and 34 – precisely the age group that insurance companies need in order keep premiums down for all customers.

“These encouraging trends show that more Americans are enrolling every day, and finding quality, affordable coverage in the marketplace,” said Kathleen Sebelius, HHS secretary.

Encouraging, yes, but it's not quite time to declare the law a resounding success.

Despite the increase in enrollment, the government has not released any data regarding how many enrollees have actually paid premiums. Even so, insurance officials and industry experts say that it will be years before anyone will be able to determine whether or not the law is ultimately successful. That’s because it will take that long for the insurance industry to gauge whether costs were in line with the amount charged for premiums.

Also, until 2016, there are provisions built into the law that serve as an economic buffer for insurance companies; losses are essentially going to be covered by a fund established by the law that Republican critics have said amounts to little more than a taxpayer-subsidized insurance industry bailout. This creates an artificial market; for those judging the law's success based on insurance company earnings, this will be a false indicator.

Another factor that is holding up even greater enrollment is the cost of premiums. "Sticker shock" from dramatic rate increases for plans with high deductibles are exerting downward pressure on enrollment (though President Obama once promised that the law would lower premiums by at least $2,500 a year).

So, while it may be "encouraging" that more younger, healthier people are paying into the system, we are still nowhere near the numbers needed to make Obamacare break even for taxpayers, so to speak. What’s more, the numbers of enrollees rising the fastest are those enrolling for taxpayer-subsidized Medicaid.

The White House will spin the latest Obamacare enrollment figures as justification that the law is working as planned, but the reality is, it is just too early to tell.