ObamaCare Causing Decline of Private Health Insurance


ObamaCare is causing the rise of government healthcare and the decline of private health insurance. This trend is unmistakable according to projections by the Centers for Medicare and Medicaid Services (CMS).

CMS says the 107 million people on Medicaid or Medicare in 2013 will rise to 135 million by 2018, a growth rate that triples that of private insurance. This trend is made even more likely by the recently announced private insurance rate hikes for 2016 that average more than 30 percent. (see Insurers Seek Skyrocket Rate Increases)

This means the American people are becoming more and more dependent upon government provided and controlled healthcare. Why is this important?

Numerous studies have shown private healthcare insurance produces better healthcare outcomes than Medicare and Medicaid. In fact, some studies show Medicaid outcomes worse than the uninsured. Yes, that’s right; the uninsured have better outcomes in many instances than people with Medicaid.

The reasons for this concern access to healthcare. No insurance is worthwhile if it does not provide access to doctors and hospitals. According to a 2014 Merritt Hawkins survey, 55% of doctors in major metropolitan areas refuse new Medicaid patients. This refusal is due to the lower fees paid by Medicaid.

Medicare is not much better. Cuts in Medicare spending due to ObamaCare have led the CMS actuaries to project Medicare fees to doctors will be lower than Medicaid by 2020. When this happens, expect Medicare access to decline to the levels of Medicaid – and Medicare healthcare outcomes to decline to their levels as well.

Scott Atlas, physician and healthcare analyst with the Hoover Institute, warns this trend of declining private insurance should be alarming to all Americans. He writes,

“Of the many negative effects of the Affordable Care Act, the increasing unaffordability of private insurance might be the most damaging. Thanks to its regulations on pricing and coverage, the law has already forced termination of private health insurance for more than five million Americans. The Congressional Budget Office is now projecting that as many as 10 million people will be forced off their chosen employer-based health insurance by 2021 – a tenfold increase in the 2011 projections at the onset of the law.”


The problem is government payments for healthcare are often below costs. Michael Cannon of the Cato Institute has calculated Medicare payments to doctors cover only about 78% of the cost of providing care; Medicaid only about 70%. This means doctors lose money on every patient with Medicare and Medicaid insurance.

Atlas says this has an impact on the cost of private insurance. He says costs are shifted back to private carriers, pushing up private premiums. Nationally, the gap between private insurance payment and government underpayment has doubled since ObamaCare, according to a 2014 study by Avalere Health for the American Hospital Association. Premiums for private policies will continue to rise, ultimately pricing out even the middle class.

Atlas gives steps to revive and expand private health insurance:

  • Reduce onerous regulatory requirements – the essential minimum benefits mandated by ObamaCare – which are driving up the cost of insurance
  • Allow low-cost, high deductible catastrophic insurance plans ­– and let people pay out of pocket for routine medical care
  • Increase the size of contributions allowed to Health Savings Accounts – to at least the equivalent of IRA contributions ($5,500 or $6,500 if over 50) instead of the current $3,350.


The goal should be the best possible healthcare for all Americans. Experience shows this comes from people being covered with private healthcare insurance. But ObamaCare is causing a shift to government-provided insurance with lower quality healthcare outcomes. This is a trend the American people should not have to live with.

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