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February 16 2016

No Surprise - Costs Drive Americans Away from ObamaCare

Patrice J. Lee

ObamaCare enrollments for 2016 were way off and now the excuses game begins.

2016 should have been a banner year for ObamaCare. With the disastrous rollout far in the rear-view mirror, President Obama and supporters of his healthcare legacy anticipated massive enrollments in what he pitched as the solution to our nation’s healthcare access and affordability problems.

In 2010, the RAND Corporation estimated that 27 million people would be on the ObamaCare exchanges while the Congressional Budget Office (CBO) estimated that enrollments climb to 21 million. The CBO lowered their estimates last year by a million people.

To-date, only 12.7 million people have signed up for coverage as of January 31. We expect at least a million of those people to either drop out or be kicked off their plans for not paying their monthly premiums. The Obama Administration is counting 11 million enrollments as a success after they halved CBO estimates then low-balled their expectations to just 10 million people.

Hard numbers don’t mean much to insurers offering plans on ObamaCare if the pools of customers don’t have the right mix of younger to older and high income to low income. So far, the Administration has failed to lure young, healthy Americans into ObamaCare at levels that balance out the costs for older, sicker customers. Also, more lower-income Americans have signed up for coverage, while higher-income Americans have sat out ObamaCare – not surprisingly since they likely have coverage or can get coverage elsewhere. Lower-income people tend to have more health problems and use more services.

This has insurers in pinch and squealing that they may pull out of ObamaCare next year.

So what’s to blame for why Americans haven’t lined up for ObamaCare as the experts estimated? Cost and affordability. No surprise there.

High premiums – even with tax payer subsidies that lower monthly premiums from sky-high rates- and high out-of-pocket costs such as deductibles keep desired customers away.

USAToday takes an interesting look at the reasoning on both sides of the aisle for why ObamaCare has failed to attract (uninsured) Americans to sign up for coverage:

Reasons why supporters say enrollment is lower than the original projections include:

• The process hasn't completely recovered from the disastrous rollout of the federal Healthcare.gov website in the fall of 2013, says Matthew Buettgens, a senior research associate with the Urban Institute.

• CBO expected a lot more employers to drop their plans and send workers to the exchanges for their coverage, notes Katherine Hempstead, director of the insurance coverage team at the Robert Wood Johnson Foundation. That hasn't happened, however.

• CBO also thought more people who didn't get subsidies would still buy on the exchanges, but several million are believed to buy direct from insurers or brokers. While that affects the overall enrollment numbers for the exchanges, Hempstead says, it also means these people are still getting better plans with ACA's protections, including a prohibition against discriminating with preexisting conditions.

Critics say signups were slower than expected because having insurance may not be as important to people as the administration thought it would be, given other financial needs. And it's often cheaper to pay the penalty and pay cash for health care, insurance brokers say. That's unless people are eligible for subsidized coverage.

Young, healthy people in particular don't feel like they should have to pay for benefits the plans have to cover, such as mental health and maternity care, says Sam Gibbs, executive director of AgileHealthInsurance.com, a private insurance exchange. Nearly half of the firm's clients are in this bracket and purchased insurance plans that don't meet the ACA but will protect them in the event of a serious injury or illness. They will pay the tax penalty and still save money, Gibbs say.

These figures reinforce what conservatives have always said about the President’s un-Affordable Care Act. Government tampering with private markets does not yield the cost-savings, effective, or desired outcomes. It yields unintended consequences.

What we need is to replace ObamaCare with patient-centered options that give insurers flexibility to offer lower-priced plans with fewer benefits and customers.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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