Insurance Expert: Obamacare a ‘Huge Failure’ with Middle-Class

Health insurance industry expert Bob Laszewski says the threat by insurance giant United Health to quit Obamacare is proof that the program is a “huge failure” with the middle-class.

“When are Obamacare apologists going to stop spinning the insurance exchange enrollment as some big victory that is running smoothly? Laszewski wrote in his blog on Thursday.

“Yes, Obamacare has brought the number of those uninsured down–because of the Medicaid expansion in those states that have taken it and because the poorest people eligible for the biggest exchange subsidies and lowest deductibles have found the program attractive,” said Laszewski, who runs Health Policy and Strategy Associates, a consulting firm that tracks developments in the insurance industry.

“That Obamacare has been a huge failure among the working class and middle-class–not to mention those who make too much for subsidies and have to pay the full cost for their expensive plans–has once again been confirmed,” he wrote.

As Laszewski sees it, the move by United Health is just part of a broader problem of financial losses among Obamacare co-ops and the for-profit insurers now selling health-coverage via the government-run exchanges:

Every health plan I talk to tells me that they don’t expect their Obamacare business to be profitable even in 2016 after their big rate increases. That does not bode well for the rate increases we can expect to be announced in the middle of next year’s elections. Why is this happening?

Because nowhere near enough healthy people are signing up to pay for the sick.

Laszewski cites a recent policy brief by the Robert Wood Johnson Foundation and The Urban Institute which found the Obamacare enrollment rate was just 35 percent of those eligible, as of June 2015. The same brief suggested this low uptake “may reflect people’s judgments about the affordability of marketplace coverage.”

In other words, only people who are getting maximum subsidies (or Medicaid) seem to think Obamacare plans are a good deal. For the program to survive, something has to change.

In January, Laszewski published his ideas for a bipartisan fix to the program. But some of his ideas, like removing the individual mandate, are unlikely to get a hearing so long as President Barack Obama is in office.