Obamacare Needs A Prescription
July 28, 2016 at 4:25 p.m.
By Gary [email protected]
A recent spate of news stories indicate that there are some serious financial side effects in store for those who buy health coverage for 2017 through the Obamacare exchanges.
Reports show that insurers in many states throughout the nation will seek major premium hikes.
Reports like the one in the Fiscal Times under the headline: “Get Ready for Huge Obamacare Premium Hikes in 2017.”
Marilyn Tavenner is president and CEO of America’s Health Insurance Plans. She says rising drug and health care costs and market shifts are pushing insurers toward stark increases in health insurance rates in the coming year.
But wait, wasn’t it just a month ago that President Obama was talking up the plan on its sixth anniversary?
Yeah, it was. He painted a rosy picture of how well the law was working
Well, sorry, but Obama’s characterization looks a little iffy.
In fact, UnitedHealthcare – the nation’s largest insurer which had expanded coverage to 34 states – announced last month it could no longer afford to cover hundreds of thousands of people in most of those states and would stop offering coverage.
Others are sure to follow as insurers lost at least $3 billion selling individual plans in 2014, according to research by Brian Blase of the Spending and Budget Initiative at the Mercatus Center of George Mason University.
Sure, the rate increases are problematic, but it’s what’s causing the rate increases that may portend dire systemic problems with Obama’s signature legislative achievement.
According to Blase’s research, 2016 enrollment is half of initial expectations and barely above 2015 enrollment.
When the ACA passed in 2010, government and private research organizations – heretofore referred to as “the experts” – projected between 21 and 27 million exchange enrollees in 2016.
But during this year’s open enrollment, only 12.7 million people selected plans. And because lots of people enroll and then fail to pay, there will likely only be about 10 million exchange enrollees by the end of the year and only about 11 million enrollees, on average, in 2016.
Blase says projections of signups doubling between 2015 and 2016 were based a general increased awareness of Obamacare and the penalty – $695 or 2.5 percent of income – reaching its peak.
But signups increased less than 10 percent between 2015 and 2016.
Also, Blase’s research shows enrollees are much poorer than the experts thought.
Experts projected that nearly half of exchange enrollees would be unsubsidized when Obamacare was fully implemented.
In reality, about two-thirds of enrollees in both 2015 and 2016 have income below 200 percent of the federal poverty level. They qualify for both large tax credits and exchange plan subsidies.
Studies show that people who don’t qualify for subsidies because their income is too high see exchange plans as a bad deal. They are better off foregoing insurance and paying the penalty.
Only 10 percent of people who signed up for an exchange plan in 2016 have income above 300 percent of the federal poverty level – $35,640 for a single person – and just 2 percent of enrollees have above income above 400 percent of the federal poverty level.
Those numbers are the same as last year, so the increased penalty didn’t make a difference.
Basically, if you make that much money, you either get coverage from your employer or you forego coverage and pay the penalty.
Enrollees are skewing much older than expected as well.
Price controls in Obamacare make insurance more expensive for younger people and less expensive for older people.
That means insurers need to sign up younger, healthy people to offset losses incurred by older, sicker people.
Contrary to the experts’ projections, insurers’ risk pools contain about 50 percent more people over the age of 55 than they expected.
Also, far fewer children are being insured than the experts expected. The vast majority of plans are for single people. Middle class families are far less likely to sign up than the experts expected and children of poor families usually get Medicaid or Children’s Health Insurance Program benefits.
Overall, the Obama administration hoped that big losses in 2014 and 2015 would be mitigated in 2016 because of the individual mandate penalty peaking.
But in fact, risk pools contain virtually the same percentage of enrollees by income and age. That shows that the big increase in the penalty didn’t make a difference, Blase’s research shows.
Bottom line? Relatively young and healthy people are not signing up for Obamacare. And neither are people above the federal poverty level – unless they have ongoing health problems.
Blase summed it up like this:
Unless people receive extremely large subsidies or have very expensive health conditions, buying exchange plans generally makes them worse off than remaining uninsured. As a result, the exchanges appear to be morphing into high risk pools for people with income less than twice the federal poverty level. Simply put, it now appears that there is a significant risk that the ACA, without major change, may lead to the destruction of the individual market for health insurance.
Destruction of the individual health insurance market.
Huh.
Could that have been the plan all along? What better way to achieve government-run health care?
But every plan has its pitfalls.
Consider this:
The 2016 open enrollment period coincides perfectly – or horribly, depending on your politics – with the November election. Basically, millions of consumers will get hit with Obamacare-generated premium increases right before they go to the polls to elect the next president.
Can you imagine Donald J. Trump locked and loaded with this kind of political ammo?
Hang on folks, this election season is going to be quite a ride.[[In-content Ad]]
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A recent spate of news stories indicate that there are some serious financial side effects in store for those who buy health coverage for 2017 through the Obamacare exchanges.
Reports show that insurers in many states throughout the nation will seek major premium hikes.
Reports like the one in the Fiscal Times under the headline: “Get Ready for Huge Obamacare Premium Hikes in 2017.”
Marilyn Tavenner is president and CEO of America’s Health Insurance Plans. She says rising drug and health care costs and market shifts are pushing insurers toward stark increases in health insurance rates in the coming year.
But wait, wasn’t it just a month ago that President Obama was talking up the plan on its sixth anniversary?
Yeah, it was. He painted a rosy picture of how well the law was working
Well, sorry, but Obama’s characterization looks a little iffy.
In fact, UnitedHealthcare – the nation’s largest insurer which had expanded coverage to 34 states – announced last month it could no longer afford to cover hundreds of thousands of people in most of those states and would stop offering coverage.
Others are sure to follow as insurers lost at least $3 billion selling individual plans in 2014, according to research by Brian Blase of the Spending and Budget Initiative at the Mercatus Center of George Mason University.
Sure, the rate increases are problematic, but it’s what’s causing the rate increases that may portend dire systemic problems with Obama’s signature legislative achievement.
According to Blase’s research, 2016 enrollment is half of initial expectations and barely above 2015 enrollment.
When the ACA passed in 2010, government and private research organizations – heretofore referred to as “the experts” – projected between 21 and 27 million exchange enrollees in 2016.
But during this year’s open enrollment, only 12.7 million people selected plans. And because lots of people enroll and then fail to pay, there will likely only be about 10 million exchange enrollees by the end of the year and only about 11 million enrollees, on average, in 2016.
Blase says projections of signups doubling between 2015 and 2016 were based a general increased awareness of Obamacare and the penalty – $695 or 2.5 percent of income – reaching its peak.
But signups increased less than 10 percent between 2015 and 2016.
Also, Blase’s research shows enrollees are much poorer than the experts thought.
Experts projected that nearly half of exchange enrollees would be unsubsidized when Obamacare was fully implemented.
In reality, about two-thirds of enrollees in both 2015 and 2016 have income below 200 percent of the federal poverty level. They qualify for both large tax credits and exchange plan subsidies.
Studies show that people who don’t qualify for subsidies because their income is too high see exchange plans as a bad deal. They are better off foregoing insurance and paying the penalty.
Only 10 percent of people who signed up for an exchange plan in 2016 have income above 300 percent of the federal poverty level – $35,640 for a single person – and just 2 percent of enrollees have above income above 400 percent of the federal poverty level.
Those numbers are the same as last year, so the increased penalty didn’t make a difference.
Basically, if you make that much money, you either get coverage from your employer or you forego coverage and pay the penalty.
Enrollees are skewing much older than expected as well.
Price controls in Obamacare make insurance more expensive for younger people and less expensive for older people.
That means insurers need to sign up younger, healthy people to offset losses incurred by older, sicker people.
Contrary to the experts’ projections, insurers’ risk pools contain about 50 percent more people over the age of 55 than they expected.
Also, far fewer children are being insured than the experts expected. The vast majority of plans are for single people. Middle class families are far less likely to sign up than the experts expected and children of poor families usually get Medicaid or Children’s Health Insurance Program benefits.
Overall, the Obama administration hoped that big losses in 2014 and 2015 would be mitigated in 2016 because of the individual mandate penalty peaking.
But in fact, risk pools contain virtually the same percentage of enrollees by income and age. That shows that the big increase in the penalty didn’t make a difference, Blase’s research shows.
Bottom line? Relatively young and healthy people are not signing up for Obamacare. And neither are people above the federal poverty level – unless they have ongoing health problems.
Blase summed it up like this:
Unless people receive extremely large subsidies or have very expensive health conditions, buying exchange plans generally makes them worse off than remaining uninsured. As a result, the exchanges appear to be morphing into high risk pools for people with income less than twice the federal poverty level. Simply put, it now appears that there is a significant risk that the ACA, without major change, may lead to the destruction of the individual market for health insurance.
Destruction of the individual health insurance market.
Huh.
Could that have been the plan all along? What better way to achieve government-run health care?
But every plan has its pitfalls.
Consider this:
The 2016 open enrollment period coincides perfectly – or horribly, depending on your politics – with the November election. Basically, millions of consumers will get hit with Obamacare-generated premium increases right before they go to the polls to elect the next president.
Can you imagine Donald J. Trump locked and loaded with this kind of political ammo?
Hang on folks, this election season is going to be quite a ride.[[In-content Ad]]
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