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Today, Forbes did an updated analysis of the current state of Obamacare, as the enrollment numbers are trickling in. The news is rather poor:
“To briefly recap this year’s enrollment figures, late sign ups and automatic renewals pushed the number of people signing up for Obamacare through Healthcare.gov to 8.6 million through the end of 2015, before any attrition. Extrapolating from the current numbers implies that total Obamacare sign-ups will reach about 14 million (once the figures from state-run exchanges are baked in). The White House had previously lowered its 2016 goals, hoping to have 10 million people still enrolled and fully paid at the end of 2016 across the federally run healthcare.gov as well as state-run exchanges. The Obama Administration should hit, or slightly top these estimates, once totals from the state exchanges are factored into the final figures.
For comparison, last year, enrollment topped out at 11.5 million. Around 10 million followed through to purchase plans and 9 million ended up with coverage at year-end, after attrition. Applying the same proportions for this year, Wall Street analysts estimate that about 11 million to 12 million consumers will confirm enrollment by paying for their coverage. About 10 million to 11 million will remain enrolled by year-end 2016. This compares to the government’s revised goal of 10 million, (and an older projection from the Congressional Budget Office for 21 million).
Yet the federal numbers show that the rate of growth in the exchanges has declined year over year, and is mostly comprised of people who were previously covered by some kind of Obamacare plan (71% in 2016). Remember that at the end of the 2015 open enrollment period, the total enrollment across both state-based and the federal healthcare.gov marketplace was up 46% from the 2014 open-enrollment period. That was before any attrition. This year, it looks like the year-over-year growth in the exchanges will come in at about half of that figure.
The age mix of those who are signing up also looks to be tracking, at best, on par with prior years and perhaps a little worse. Remember, Obamacare was always dependent upon more young and presumably healthier consumers signing up for the inefficient plans to help subsidize older and costlier beneficiaries. But many young consumers are choosing to forgo the exchange’s high premiums, even as the government’s penalties for remaining uncovered by a “qualified” plan start to rise. For many of the young, and healthy, Obamacare’s overpriced plans are a bad deal.
Data that HHS released yesterday on the federal and state-based exchanges shows that 35% of total federal and state-based selections were by people younger than 35 thus far for 2016. This compares to 33% during the similar time frame during the 2015 open enrollment period and 29% during the 2014 open enrollment period. For health insurers, the slight improvement in the age mix isn’t expected to be material.
Obamacare’s acolytes are casting the tepid growth as success. Under their calculus, any expansion is a measure of progress. This math largely draws from how one charts achievement–whether it’s drawn from considerations of economics, or derived mostly from politics. If the goal is merely expanding Obamacare’s footprint, then each enrollee adds to the political enterprise. But Obamacare was supposed to be affordable, and self-sustaining. It was supposed to replace the individual and small group markets and the health plans people liked, and couldn’t keep.”
The government is willing to do anything to cast Obamacare in a positive light. But nothing can save it from the fact that the enrollment at this point in 2016 will only be half of what was projected when the legislation was voted on in 2010. If anyone thought that Obamacare would only have covered 10 million persons at this point — instead of the 21 million — there is little doubt that it would not have been passed.
Even today, the Obama voted to veto the bill that would have repealed Obamacare (the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015). Unfortunately for millions of Americans, Obamacare has proven to be yet another bungled, failed, government pipe-dream.
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Rich Lowry over at National Review pointed out some hard realities of Obamacare as we enter in a new enrollment season.
“Yes, ObamaCare has covered more people and has especially benefited those with pre-existing conditions (to be credible, Republican replacement plans have to do these things, as well), but the program is so poorly designed that, surely, even a new Democratic president will want to revisit it to try to make it more workable.
Enrollment is falling short. The Obama administration projects that it will have roughly 10 million people on the state and federal exchanges by the end of next year, a staggering climb-down from prior expectations. The Congressional Budget Office had predicted that there would be roughly 20 million enrollees. If the administration is to be believed, enrollment will only increase about another million next year from its current 9 million and only sign up about a quarter of the eligible uninsured.
Premiums are rising. Not everywhere, but steeply in some states. Indiana is down 12 percent, but Minnesota is up 50 percent. Health care expert Robert Laszewski points out that it’s the insurers with the highest enrollment and therefore the best information about actual enrollees that have tended to request the biggest increases — a sign that they don’t like what they’re seeing in their data.
Relatedly, the economics are shaky. According to a McKinsey Co. analysis, last year health insurers lost $2.5 billion in the individual market that ObamaCare remade. ObamaCare co-ops that were supposed to enhance choice and lower costs have been failing and almost all of them are losing money, a victim of the absurd rules (no industry executives on their boards, no raising capital in public markets, etc.) imposed on them by the law.
The problem with ObamaCare in a nutshell is that on one hand, by imposing motley regulations and mandates, it increases the price of health insurance, and on the other hand, by providing subsidies, it tries to hide the cost — but not enough.
According to an analysis by the health consultancy Avalere, the poor or near-poor have been signing up, but enrollment steeply drops off further up the income scale as the subsidies fall away. It found that three-fourths of uninsured people earning less than 150 percent of the federal poverty level got coverage through Medicaid or the exchanges, while almost none of uninsured making more than 250 percent of the federal poverty level have enrolled.
For them, it’s just not a good deal. A study of the ObamaCare exchanges by researchers at the Wharton School found that “even under the most optimistic assumptions, close to half of the formerly uninsured (especially those with higher incomes) experience both higher financial burden and lower estimated welfare.”
Even the success that ObamaCare has had enrolling people should come with an asterisk. The Department of Health and Human Services announced earlier this year that nearly 11 million people have signed up for public health insurance — Medicaid or the children’s health program, CHIP — since 2013. If Medicaid is better than nothing (although this is harder to prove than you might think), it is substandard coverage that locks the poor into second-class care with limited access to doctors.
If the goal was to expand this deeply flawed program, it could have been achieved without the expense, disruption and economic irrationality of the rest of ObamaCare.
(emphasis added).
As Laszewski points out, on the individual market, ObamaCare is a monopoly. It gives money to people to buy its product and through the individual mandate punishes those who don’t. And yet it’s still having trouble making the sale.”
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With open enrollment for Obamacare beginning in a week, the Wall Street Journal outlines some of the major failures of this legislation to attract enrollees. Obamacare is severely behind target, which in turn affects costs for premiums for subscribers and costs to the government for subsidies. The Wall Street Journal suggests that within a year, by 2017, the need to overhaul and/or replace Obamacare will be necessary. Read their thoughts below:
ObamaCare’s image of invincibility is increasingly being exposed as a political illusion, at least for those with permission to be honest about the evidence. Witness the heretofore unknown phenomenon of a “free” entitlement that its beneficiaries can’t afford or don’t want.
This month the Health and Human Services Department dramatically discounted its internal estimate of how many people will join the state insurance exchanges in 2016. There are about 9.1 million enrollees today, and the consensus estimate—by the Congressional Budget Office, the Medicare actuary and independent analysts like Rand Corp.—was that participation would surge to some 20 million. But HHS now expects enrollment to grow to between merely 9.4 million and 11.4 million.
Recruitment for 2015 is roughly 70% of the original projection, but ObamaCare will be running at less than half its goal in 2016. HHS believes some 19 million Americans earn too much for Medicaid but qualify for ObamaCare subsidies and haven’t signed up. Some 8.5 million of that 19 million purchase off-exchange private coverage with their own money, while the other 10.5 million are still uninsured. In other words, for every person who’s allowed to join and has, two people haven’t.
Among this population of the uninsured, HHS reports that half are between the ages of 18 and 34 and nearly two-thirds are in excellent or very good health. The exchanges won’t survive actuarially unless they attract this prime demographic: ObamaCare’s individual mandate penalty and social-justice redistribution are supposed to force these low-cost consumers to buy overpriced policies to cross-subsidize everybody else. No wonder HHS Secretary Sylvia Mathews Burwell said meeting even the downgraded target is “probably pretty challenging.”
The HHS survey shows three of four ObamaCare-eligible uninsured people think having coverage is important—but four of five say they couldn’t fit their share of the premiums into their budgets even after the subsidies. They’re not poor; they tend to have jobs in industries like construction, retail and hospitality but feel insecure financially; and they prioritize items like paying down debt, car repairs or saving to buy a home over insurance.
The law’s failure to appeal to the young and rising middle class is already cascading through the insurance markets. Researchers at the Robert Wood Johnson Foundation and Urban Institute recently published a remarkable study of the industry barometer called medical loss ratios, or MLRs, and the pressure is building fast.
MLRs measure the share of premium revenue that flows to reimbursing medical claims. ObamaCare sets an MLR floor of 80% for patient care, with one-fifth left over for overhead like administration and profits, and the pre-ObamaCare 2010-13 historical trend for the individual market ranged from 79% to 86%.
The researchers found that in 2014—the first full year of claims experience in ObamaCare—average MLRs across all health plans sold on 16 state exchanges roamed from 90% to 99%. Average MLRs in 11 states climbed to 100% or more, reaching as high as 121% in Massachusetts. A business can’t stay solvent for long spending $1.21 for every $1 that comes in.
The 2014 MLRs are used to set rates for 2016 premiums, which are still under regulatory review. But the researchers estimate that to rebound to an MLR of 85%, premiums in the 11 money-losing states need to rise by 10% to 36% in the best estimate and 23% to 52% in the worst scenario. The familiar danger is that as rates rise, more people drop out, and thus rates must rise still higher, as the states that attempted ObamaCare-like regulatory schemes in the 1980s and 1990s discovered.
ObamaCare liberals pose as what-works-and-what-doesn’t technocrats. So perhaps they’d care to explain what it says about their creation that so many rational adults are willing to pay a fine of $695 or 2.5% of their earnings, whichever is higher, for the privilege of not buying an ObamaCare-compliant health plan.
***
ObamaCare will almost inevitably be reopened in 2017, whoever wins the election. The good news is the emerging consensus among Republican candidates about a credible, pragmatic and optimistic alternative. Jeb Bush was the latest to release a plan two weeks ago—and this is a debate that has always deserved to be litigated at the presidential level to create a mandate for reform.
The basic approach is to deregulate insurance and medical practice while replacing ObamaCare’s complex subsidy schedule with a refundable tax credit for individuals who lack job-based coverage. Unchained from benefit and redistribution mandates, insurance products and prices would come to reflect what consumers want. The credit would be sufficient to buy at least coverage for catastrophic expenses if people get sick, and the trade-offs of such skinnier plans might look better to voters priced out of ObamaCare.
GOP reformers also recognize that the Cadillac tax on high-cost employer-sponsored health plans is a heat shield that might let them solve some of the problems of the pre-2010 health finance status quo. Substituting a cap on the tax-code subsidy that helps drive medical inflation is more politically plausible with the Cadillac tax in place than without.
Mr. Bush was shrewd to frame his proposal with the vocabulary of innovation and aspiration. ObamaCare is built on a 20th-century chassis that is ever less relevant to modern medicine and consumer finance. If the law continues to underperform, voters may be open to a new model that puts their choices and needs ahead of the political class’s.
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The next open enrollment period for Obamacare begins in a few weeks. “Health and Human Services Secretary Sylvia Burwell announced Thursday that an expected 10 million Americans will be covered by late 2016 by health plans they bought on the federal and state insurance exchanges created under the law.”
This is a far cry from the CBO projections when Obamacare was passed. Last year, we saw lower revisions for enrollment from 13 million to a hopeful 9.1 million. Obamacare may have barely hit THAT target; the Washington Post reports that the number looks to be around “9.1 million Americans the administration believes will have ACA health plans by the end of this year.”
This is stunning news. To say that 10 million will be covered by 2016 means that the Obama Administration predicts a mere 1 MILLION enrollees this year. As the Washington Post reminds us, 10 million is “just half the most recent forecast by congressional budget analysts, who have long expected 2016 to usher in the biggest surge in enrollment.”
CBO forecasts had predicted 21 million enrollees in 2016, and 32 million by 2019. As expected, there are a litany of excuses for the abysmal numbers:
Still, substantive forces are at work behind the calculation. According to HHS estimates, about 10.5 million uninsured people are eligible to buy a health plan on the exchange, and they are proving more difficult to reach than those who bought coverage early on.
In addition, federal health officials point out that the dynamics of insurance coverage have not been playing out as analysts expected. Fewer employers have dropped health benefits for their workers, and fewer consumers have switched from older policies they purchased on their own. Both factors, HHS officials say, play into their projection of how many people are likely to gravitate to the exchanges.
HHS contended on Thursday that exchange enrollment, originally pegged to reach 24 million within several years, is not plateauing but is instead on “a much longer path towards equilibrium,” as a senior official said.”
What’s even less clear is how how this affects the budget projections and funding of Obamacare. An article last month in the Washington Times outlined how the enrollees for 2016 needed to double to stay solvent. On top of that, the penalty for not having insurance increases begins to increase sharply. The penalty during the first year was $95 or 1 percent of income above the filing threshold — a relatively minor bite. For tax year 2015, the penalty will be $325 or 2 percent of income, and for 2016 it will be $695 or 2.5 percent of income. Per person.
Remember when we were told that Obamacare would help millions to have insurance and also save Americans $2500/family? Me too.
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Jeffery Anderson over at The Weekly Standard took a peek at Obamacare’s initial projected enrollment numbers and compared them to the current actual figures. What he found was that Obamacare is not as widely successful as the rosy Congressional Budget Office (CBO) estimates from 2010.
“Given that Obamacare’s supporters like to take the Congressional Budget Office’s overly optimistic scoring of the president’s signature legislation as gospel, it’s fun to look at how poorly Obamacare is actually doing in relation to earlier CBO projections. When the Democrats rammed Obamacare through Congress in 2010 without a single Republican vote, the CBO said that the unpopular overhaul would lead to a net increase of 26 million people with health insurance by 2015 (15 million through Medicaid plus 13 million through the Obamacare exchanges minus 2 million who would otherwise have had private insurance but wouldn’t because of Obamacare).
Fast-forwarding five years, the CBO now says that Obamacare’s tally for 2015 will actually be a net increase of just 17 million people (10 million through Medicaid plus 11 million through the Obamacare exchanges minus 4 million who would otherwise have had private insurance but won’t, or don’t, because of Obamacare).
In other words, Obamacare is now slated to hit only 65 percent of the CBO’s original coverage projection for 2015.
Obamacare’s under-publicized failure on this key point is attributable to a variety of factors, including but not limited to the following: People aren’t thrilled with Obamacare-compliant insurance’s high cost and limited doctor networks, and some would even rather pay a fine for refusing to buy such insurance than pay its premiums; the Supreme Court ruled that part of Obamacare was unconstitutional, thereby giving states more freedom not to help expand it; and HealthCare.gov has been more reminiscent of DMV.org than of Expedia.com.
In addition (and just as the CBO originally projected), the bulk of Obamacare’s net coverage gains are coming from dumping people into Medicaid (59 percent of the current projected net increase in 2015), not from getting people enrolled in private insurance (41 percent). Of course, President Obama rarely if ever talks about that aspect of Obamacare — but Republicans should.”
Desperate to get more people enrolled too, the Obama Administration announced last month another “special enrollment period” around tax time this year, to allow those who found out they have to pay a penalty/tax/fee instead of having insurance in 2014, the opportunity to not make the “mistake” again.
Those who opted not to have insurance in 2014 are fined $95, or 1% of their income, whichever is greater, which they pay when then file their 2014 taxes this year. In 2015, the fine increases to $325 or 2% of income. Enrollment in the special enrollment period has been lackluster so far.
The Administration just doesn’t seem to get that many people still don’t think Obamacare to be such a great piece of legislation, and certainly aren’t tripping over themselves to purchase an Obamacare plan.
