The ACA: Still Falling Short
A realistic assessment of Obamacare shows it is not delivering what was promised.
By James C. Capretta
NaionalReview.com
The Obamacare open-enrollment season (supposedly)
closed yesterday, so it is good time to step back
and assess where things stand with the law and its
first-year implementation.
Interestingly, Obamacare remains something of a
Rorschach test for journalists and health-policy
analysts. Looking at the same set of facts, two
observers can reach very different conclusions.
For instance, Noam Levey of the Los Angeles Times
writes that Obamacare “has spurred the largest
expansion in health coverage in America in half a
century.”
Meanwhile, health consultant Howard J. Peterson,
writing at the Philadelphia Inquirer news site,
says “the first four years of Obamacare has led
to solving about 10 percent of the problem of
uninsured citizens.” He expects no further
improvement in the coming years.
So which is it? Is Obamacare on track to be an
historic achievement? Or is it falling well short of
the lofty goals set for it by the administration?
The Obamacare exchanges reportedly will have
enrolled at least 7 million persons in health
insurance plans through the end of March. As the
Obama administration predicted, there was a large
increase in sign-ups in the final days of the
open-enrollment period, pushing the total enrollment
numbers up even beyond the 6 million estimate touted
by the president just last week.
This is without question good news for the law’s
supporters and a significant turnaround since last
November. After the first two months of shaky
enrollment numbers, I expected the first year
sign-up totals to be far short of projections. I was
clearly wrong about that.
Administration officials realized when the fiasco
was unfolding last fall that nothing mattered in the
first year except getting people on the program —
and so they did whatever was necessary to
HealthCare.gov to make signing up easy. Those fixes
are likely to lead to a large percentage of
erroneous subsidy payments, as controls and other
checks were turned off. That’s clearly a price the
administration will gladly pay to get more people
onto the program.
Seven million is also an overstatement of true
enrollment in the insurance plans. About 20 percent
or so of the enrollees have failed, or will fail, to
continue payment of their required premiums,
according to insurance-industry observers. So 7
million sign-ups translates into a little less than
6 million people who are expected to receive
coverage.
And who are these enrollees? Remember, Obamacare
forced the cancellation of many millions of
insurance plans sold in the individual insurance
market. The president later indicated that these
plans could be reopened, but only in states with
insurance regulators willing to go along with the
president’s last minute change of heart. Some number
of people with canceled plans likely ended up in the
exchanges because they had no other real choice.
Thus, several surveys have unsurprisingly shown that
a relatively small percentage — perhaps one-third or
lower — of the enrollees in the exchanges were
previously uninsured. That implies that, so far,
enrollment in the exchanges has reduced the ranks of
the uninsured by about 2 million people.
It is also clear at this point that there are large
state-by-state differences in enrollment experience.
In states with activist governments pushing hard for
enrollment, such as California and New York, the
enrollment numbers are relatively high. But in large
parts of the country, the numbers are far lower. For
instance,
at the end of February, enrollment in the
California exchange had reached 2.3 percent of the
state population. Meanwhile, in West Virginia, it
was just 0.6 percent, and in Oklahoma it was just
0.9 percent. The numbers will obviously go up with
March added to the enrollment totals, but the state
disparities are unlikely to disappear entirely.
Each state is its own insurance market, whether it
uses the federal exchange system or not. These state
differences could mean that the Obamacare exchanges
are viable in some states and regions of the
country, while in other states and regions the
numbers remain too low to sustain a stable insurance
pool.
The administration also touts the Medicaid
expansion as helping to reduce the uninsured. But
most of the millions of new sign-ups in Medicaid are
by people who were previously eligible for the
program anyway. The number of people now on Medicaid
who would otherwise have been uninsured is likely
around 3 million or so at this point.
The original goals for Obamacare were far more
ambitious. At the time of enactment, the
Congressional Budget Office (CBO)
estimated that Obamacare would lower the ranks
of the uninsured by 19 million in 2014. Even as
recently as last May, CBO
estimated the reduction in the uninsured would
be 14 million this year.
Moreover, for every newly insured American, there
are several others who are now getting far worse
health coverage than they had last year. Their
premiums have gone up. They are facing much higher
deductibles. And they are being forced to pay for
mandated benefits that they would rather not have.
This is the reason that Obamacare’s poll numbers
continue to sink, and are unlikely to be buoyed by
encouraging enrollment numbers.
At its heart, Obamacare was a large-scale
redistribution program. It provides large new
subsidies to lower-income households and to those
with previously expensive insurance due to risk
rating of their premiums. These subsidies are paid
for by raising premiums on many millions of
previously insured households, raising taxes
significantly, and cutting Medicare.
The end result will be a reduction in the uninsured
of some magnitude, that’s for sure. But it was never
going to be hard to reduce the uninsured if that was
all that concerned policymakers. Massive public
subsidies and expansion of free public-insurance
programs can expand insurance enrollment, so long as
others were willing to pay for it.
But that wasn’t what was promised. Americans were
told that reform would lower costs for everyone, and
that no one would lose the policies they previously
held and liked. People are dissatisfied with
Obamacare because they’ve realized the law will
never deliver on these promises. Indeed, just
yesterday
it was announced that health-care costs rose at
the fastest pace in a decade in the last three
months of 2013. Most Americans are seeing no benefit
whatsoever from Obamacare, and in fact are paying
much more than they ever have before.
In its first year, Obamacare did not completely
collapse from lack of support or interest. That’s
true. But that’s not the same thing as saying the
law is out of the political woods and on track to be
broadly accepted by the American people. Far from
it.
— James C. Capretta is a senior fellow at the
Ethics and Public Policy Center and a visiting
fellow at the American Enterprise Institute.