The Obamacare Letdown

New evidence suggests most Obamacare enrollees were previously insured. Once again it seems we didn’t get much bang for our Obamacare buck.

A McKinsey and Company survey of nearly 3,000 Americans who were eligible to buy insurance on the Obamacare exchange found that only about half enrolled in a plan. Of those slightly more than half chose to renew a plan they already had. And among the remainder who bought new plans 74 percent of them had been previously insured. Just 26 percent of Obamacare enrollees were previously uninsured.

Avik Roy combines this with the percentage who have paid a first month’s premium (enrolled instead of just signed up) and comes up with a total of 1.7 million previously uninsured who got insurance through the exchange. He adds another 865,000 who bought insurance outside the exchange (without a subsidy) for a total of 2.6 million newly insured. Roy concludes “What the exchanges appear to be doing is mainly helping people who were previously insured.”

This is not what the administration promised when it was trying to sell Obamacare. On that note, Ramesh Ponnuru wrote an excellent piece for National Review which reminds us what the proponents of the law said it would do. It was three things really. One, it would expand coverage to millions who were previously uninsured (14 million was the CBO estimate). Two, it would reduce costs. The President repeatedly said an average family would save $2,500 a year on premiums. Three, one of Obamacare’s big selling points was it would leave everyone who was happy with what they had alone.

So how is the law doing based on those promises? As the McKinsey survey suggests, Obamacare is not insuring the uninsured at anywhere near the level expected. The Medicaid expansion was somewhat more successful and obviously could have been even bigger if it had been expanded in every state. However, no one is really surprised that giving away free healthcare is popular. Raising the Medicaid threshold is something that could have been done without all the wobbly insurance exchanges, narrowed networks, individual mandates, cancellations and other issues associated with Obamacare. And as I pointed out here, 10 states already had a young adult provision on the books before Obamacare. That was another change we could have made to expand coverage with very little disruption.

As for Obamacare saving money, the average family is not seeing a $2,500 savings on premiums as the President promised. As I pointed out here, that figure was another bit of sleight-of-hand. The President took the total savings a couple of professors estimated for the entire medical system
and divided that by the number of families in the U.S. to come up with a
theoretical savings on premiums. But the actual figure was always a
savings to the system (i.e. between the government and doctors, etc.),
not to individuals or families. In other words, it was another lie.

We won’t know how sharply premiums will be going up yet but they will be
going up as Secretary Sebelius admitted during congressional testimony.
As this Health Affairs post suggests, premiums could go up 4-7% just to account for the drop in reinsurance payments insurers can claim next year. Add to that the 2.4% increase needed to make up for the older than expected risk pool and we have a baseline that could be as high as 9.4 percent. In any case, the $2,500 premium savings the President promised are not going to happen.

The third promise doesn’t even require discussion. We all know the President and his administration lied when they said (at least 50 times) “if you like your plan, you can keep it.”

Back in April, health insurance industry expert Bob Laszewski predicted that the wave of feel-good numbers being put out by the Obama administration would eventually lead to a letdown. He wrote:

By celebrating seven million enrollments, the administration has set
some pretty high expectations: That Obamacare is making a huge dent in
the number of those who were uninsured.

But it would appear that is not the case and they will have to manage a
steady flow of hard data that will undermine today’s celebration–in an
election-year.

Some of that letdown seems to be happening now. Obamacare is not living up to what Americans were repeatedly promised by this President. The question is whether Democrats will pay a price for that or whether their attempts to shift blame for the failure to Republicans will be successful.