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Federal officials say the new health insurance exchanges have received 700,000 applications since launching on October 1st. In many cases, though, consumers have simply created accounts and not purchased insurance. As a result, lots of health insurance companies say they've only received a trickle of enrollment through healthcare.gov.

That, of course, is the federally run marketplace that serves 36 states and has been plagued by technical problems. NPR's John Ydstie reports on the financial consequences for the government and insurers if enrollment on the exchanges fall short.

JOHN YDSTIE, BYLINE: The Congressional Budget Office projects that seven million people will buy insurance on the Affordable Care Act exchanges for coverage in 2014. Many of them with low incomes will get substantial federal subsidies to help pay their premiums.

But so far, it appears, most of the people being enrolled in the marketplaces are not signing up to buy private insurance. Rather, they're enrolling in Medicaid, the government health care system for the poor, which is being expanded in many states.

Larry Levitt, a health care expert and senior vice president at the Kaiser Family Foundation, says that's not surprising since Medicaid is free and most people would have to pay something for the private insurance.

LARRY LEVITT: As soon as you sign up for a plan, the insurer is going to ask you for the first month's premium. And given that the coverage won't be effective until January 1st anyway, I certainly wouldn't be in a rush to, you know, pay money that won't really help me for a couple months.

YDSTIE: Levitt says he doesn't expect a surge of enrollments to start before mid-November. The administration said today that by the end of November, the federal exchange will work smoothly for the vast majority of users. But what if the technical problems and bad publicity dampen enrollment significantly? What's the financial impact for the government? Levitt says in the short term, it would actually save the government money.

LEVITT: If fewer people enroll, not only will the government be paying out less in tax credits, but they'll be taking in more money in the form of penalties.

YDSTIE: Uninsured individuals must sign up by March 31st or face a penalty - one percent of their annual income or $95 dollars, whichever is higher. And the penalty rises in later years. But for insurance companies participating in the exchanges, it's not just a question of whether the exchanges fall short of seven million enrollments for the first year.

Robert Zirkelbach, spokesman for the AHIP, the association that represents U.S. health insurers, says the demographic mix of participants is crucial.

ROBERT ZIRKELBACH: It's not simply the absolute number of people that are covered that's ultimately going to determine whether coverage is affordable. It's the type of people that decide to purchase.

YDSTIE: In fact, the government estimates that of the seven million people projected to sign up for insurance in the first year, almost 40 percent of them need to be young and healthy to keep premiums low and make the system work financially.

ZIRKELBACH: Because if only people who are older and have high health care cost decide to purchase coverage now, that's going to mean that next year, when open enrollment comes around again, premiums may be significantly higher than we see today.

YDSTIE: And rising premiums could lead to a downward spiral for the exchanges. That's because they could convince young, healthy people to pay the penalty rather than sign up for insurance that costs significantly more. Also, some of the operating costs for the exchanges, like computer servers and call centers, will be paid with fees on each policy sold, so fewer policies could undermine the exchanges themselves financially. And higher premiums could end up costing the government more in subsidies.

MIT professor Jonathan Gruber, who helped develop both Obamacare and a similar Massachusetts health care system back in the 1990s, says the Massachusetts program was initially delayed for several months and then signed up just 123 people in its first month of operation.

JONATHAN GRUBER: We have to stop overreacting to day-to-day noise. When we passed this law in Massachusetts - I was on the board that implemented it - we got a report every month on how they were doing. That's probably about the right frequency to be thinking about this.

YDSTIE: Gruber also says that in Massachusetts, there was a rush of younger, healthier people signing up as the prospect of a penalty loomed closer.

GRUBER: And what you saw was a big rush, right at the end, among the healthiest enrollees, that the mandate kicking in really seemed to matter. And remember, this law, the mandate doesn't effectively kick in until April 1.

YDSTIE: The Obama administration can only hope that the early problems don't sink the exchanges before they set sail.

John Ydstie, NPR News, Washington.

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