Six years ago this October Americans began signing up for the Affordable Care Act, a new healthcare system passed by Democrats under President Obama and destined to be forever known by his name, ObamaCare. How well has it achieved its objectives?
ObamaCare was supposed to provide universal healthcare coverage. At the time of its passage, about 84% of Americans had healthcare coverage. Although Obama said often his bill would cover everybody, the White House later admitted that coverage of 95% of Americans was what they considered realistic.
The U.S. Census Bureau says 91.5% of Americans had health insurance in 2018, the latest data available. This is actually down from the 92.1% with coverage in 2017. The decline in coverage was 0.7% in those enrolled in Medicaid. Private coverage was unchanged.
Six years later there are about 12 million more Americans on Medicaid now than before ObamaCare. Many of these were previously covered by private health insurance but when they became eligible for Medicaid under the ObamaCare expansion guidelines, they dropped their private plans and enrolled in Medicaid. In other words, they stopped paying for their own health insurance and let the taxpayers pay for their coverage.
ObamaCare has been generally good for the poor, especially those who previously earned too much to qualify before the new eligibility rules. Those Americans now are either eligible for Medicaid or eligible for large government subsidies to purchase private health insurance on the ObamaCare exchanges. For these people, ObamaCare has provided coverage, albeit in plans with poor access to healthcare like Medicaid and ObamaCare exchange plans.
But for those in the middle class who earn too much to qualify for government subsidies, ObamaCare has resulted in high premiums and high deductibles that many have considered unaffordable or not worth the expense. They’d rather go without insurance than pay high prices for healthcare coverage they don’t need. This has significant ramifications for the insurance market as a whole.
According to health insurance industry analyst, Robert Laszewski, only 40% of the individual market is insured because the costs are too prohibitive. Laszewksi explains how this impacts the market:
“Given the unattractiveness of the ObamaCare individual market policies, we never had more than 40% of the subsidy eligible sign-up for coverage (75% are needed for a balanced and efficient risk pool) leading to very expensive policy premiums and a cycle of ever higher premiums driving out even more of the unsubsidized who could no longer afford the premiums and deductibles – family plans costing $15,000 to $20,000 a year with $7,000 individual deductibles were not uncommon.”
On the winning side are the private insurance companies. Insurance companies have raised their rates since the subsidies insulate those people from the higher premiums and deductibles. The highly subsidized don’t feel the impact – the taxpayers do. In fact, the insurance industry will pay out $800 million in consumer rebates this year because they exceeded maximum profit limitsunder the law. Hospitals are also benefiting from the expansion of Medicaid and the increase in coverage of the poor under ObamaCare.
Insurance companies also profit from the Medicaid expansion under ObamaCare because two thirds of Medicaid beneficiaries (54 million) are now enrolled in private Medicaid contracts with $300 billion in Medicaid money paid through health insurers. This is an increase from only 60 billion ten years ago, before ObamaCare.
Losers are anyone who doesn’t qualify for government subsidies for their health insurance. Many of these cannot afford private insurance coverage if it is not provided by their employer. But even those who get their insurance through their employer are losers because the rising costs of these policies is hurting the profits of their employers and preventing them from wage increases they should be getting if not for these rising healthcare costs. For some, the increase in business expenses leads to failure of the business and the loss of their jobs.
- ObamaCare Winners
- Very poor and poor Americans
- Private insurance companies
- ObamaCare Losers
- Middle class Americans
- Upper class Americans
- All Taxpayers
- Employers and employees