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July 1 2016

Three Ways ObamaCare is Failing

Patrice L. Onwuka

ObamaCare continues to miss projections as it unravels layer of red tape by layer of red tape.

We know about skyrocketing premiums and inadequate number of healthy young people recruited, but here are three more headaches for the Obama Administration:

#1. Some 1.6 million customers dropped ObamaCare coverage. Some 11.1 million people had coverage at the end of March 2016 compared to the 12.7 million who signed up for coverage before the January 31st deadline. We’ve seen this pattern of attrition yearly. This 13-percent drop reflects the fact that many who signed up for ObamaCare didn't actually pay their first month's premium--you aren't really signed up until you do this. About 17,000 people lost coverage because of citizenship or immigration documentation issues, an issue that has plagued ObamaCare since its roll out.

The Administration is trying to put a good face on the drop by saying they anticipated it (still only 10million had signed up by the end of enrollment this year), according to Fox News:

“The drop off is maybe a tad higher than expected, given that they dropped people as they went along," said Larry Levitt, an expert on the health care law with the nonpartisan Kaiser Family Foundation. "But it's in the range of reasonable results.”

The administration said a retention rate of 87 percent is in line with its goal of about 10 million still signed up at the end of this year.

Let’s not forget though that by 2016, 21 million Americans were supposed to have enrolled in ObamaCare, according to the Congressional Budget Office.

Even if 10 million people remain enrolled in ObamaCare, the total enrollment is a vanity metric. The challenge for the Administration has been enrolling the right mix of young, healthy Americans to pay costs for older, sicker high-use customers. Enrollment by young people has consistently been lower than needed.

#2. ObamaCare enrollees incur eye-popping costs compared to their counterparts outside of the system. ObamaCare enrollees generated claims nearly double (93 percent) that of average medical claims for enrollees in non-qualified health plans. A qualified plan provides comprehensive coverage that meets all of the benefits defined by the un-Affordable Care Act. When researchers at the Mercatus Center analyzed 174 insurers, they found that individual market enrollees in ACA-approved plans incurred nearly $5,000 in average medical claims in 2014—93 percent more than the roughly $2,600 in average medical claims incurred by people enrolled in individual market non-ACA qualified plans. Even taxpayer subsidies weren’t enough to cover the large losses generated to insurers.

The future looks murky, especially as more insurers pull out of the exchanges, as one of the report co-authors explained to the Free Beacon:

“Rather than stabilizing in 2016 as many experts predicted, the Affordable Care Act is leading to large premium hikes and less choice and competition in the individual insurance market as plans prove unattractive to relatively young, healthy, and middle-class people,” Blase says.

“Without significant revision to the ACA that makes insurance more attractive to younger and healthier people and that significantly reduces the incentive for people to wait until they are sick to purchase coverage, the individual market looks increasingly likely to morph into a highly subsidized high risk pool.”

And risk pools continue to be such a headache for insurers that they are begging for money from Washington.

#3. ObamaCare insurers want a bailout too! A handful of healthcare insurers are suing the Department of Health and Human Services (HHS) demanding unpaid risk corridor payments. For example, in early June, Blue Cross Blue Shield of North Carolina jumped on the lawsuit train and even the Illinois ObamaCare co-op is suing for risk-corridor payemnts.

The risk corridor programwasa guarantee of extra funds from Washington to insurers participating in ObamaCare to hedge against high costs caused by high claims of new enrollees. In 2014, the first year after ObamaCare went live, insurers sought more than $2 billion in risk corridor payments, but only received $362 million from HHS. They whined and now are turning to the law to sue their way to solvency.

I wouldn’t feel too sorry for these insurers. As a Fiscal Times op-ed writer notes:

Insurers helped cheerlead the creation of ObamaCare, with plenty of encouragement – and pressure – from Democrats and the Obama administration. As long as the Affordable Care Act included an individual mandate that forced Americans to buy its product, insurers offered political cover for the government takeover of the individual-plan marketplaces. With the prospect of tens of millions of new customers forced into the market for comprehensive health-insurance plans, whether they needed that coverage or not, underwriters saw potential for a massive windfall of profits.

Six years later, those dreams have failed to materialize. Now some insurers want taxpayers to provide them the profits to which they feel entitled -- not through superior products and services, but through lawsuits.

While the Administration would rather just “move on” from criticism of ObamaCare, it’s hard to ignore the unraveling of one of the biggest expansions in government control of a segment of our economy in the history of our country.  

Central planning was not the solution to getting Americans better access to affordable healthcare. The curtain has been pulled back exposing ObamaCare as being nothing more than government control cloaked in faux free-market dressing. These three failures are just the latest evidence of that.

IIndependent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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