We’re now in the third open enrollment period of ObamaCare and we know more about the reality of this law than ever before. Today we’ll discuss what we know and next post we’ll discuss some things we don’t know.
Doug Badger of The Galen Institute lists six things we have learned thus far since passage of the law in 2010:
Things We Know
- Fewer people are uninsured. There is much disagreement as to how many fewer are uninsured but this statement is true. At one time HHS Secretary Sylvia Matthews Burwell contended that 17.6 million fewer people were uninsured since 2010. But recently she admitted that now only 9.9 million more are insured in 2015.
The Census Bureau estimated that 47.2 million Americans were uninsured in 2010 before passage of the law. In 2014 that number was reported as 36.7 million, a difference of 10.5 million. That’s much closer to the number that Burwell now admits in 2015. That represents roughly one-third fewer insured of the 30 million uninsured that the architects of the law promised.
- Most of the newly insured are on Medicaid. Thirty-one states and the District of Columbia expanded Medicaid under the new law. A study by Mark Farrah Associates, using government data on Medicaid enrollment, found that more than 9.2 million people gained coverage in 2014.
The number of people enrolled in individual private coverage increased by 4.8 million, but nearly 4.5 million people lost employer sponsored insurance. The net increase of private coverage was only 260,000.
Overall, 97% of the net increase in newly insured people was accomplished by Medicaid expansion, not by private health insurance coverage, according to their study.
- ObamaCare benefits uninsured people with pre-existing medical conditions with incomes below 200 percent of FPL. For those people who make too much to qualify for Medicaid but less than 200 percent of the Federal Poverty Level (FPL), ObamaCare offers a government handout to pay medical bills. These people have enrolled in large numbers since the benefits outweigh the costs.
A study by Avalere Health found that more than three-fourths of uninsured people earning less than 150 percent of poverty had obtained coverage either through Medicaid or through the exchanges. But the numbers enrolled dropped off after that with only 41 percent in the 150 to 200 percent level. Above 200 percent was much worse. In other words, ObamaCare is only a good value if the government will buy it for you.
- Subsidies can lead to trouble with the IRS. Subsidies are based on your estimated income for the coming year. If you overestimate, you get less of a subsidy. But if you underestimate, you will owe the IRS a refund of some of your subsidy.
A Kaiser Family Foundation study published last spring found that 45 percent of subsidy recipients had received less from the government than they were entitled to – they overestimated their income. But 50 percent received too much of a subsidy – they underestimated their income. These people owe the IRS a refund. Their subsidies will terminate effective January 1, 2016, if they fail to pay.
- ObamaCare is a bad deal for most uninsured with incomes over 200 percent of FPL. In this income range the cost of ObamaCare becomes prohibitive and the value diminishes, especially if they are in good health. The Avalere Health study found that four of five uninsured people with incomes between 251 and 300 percent of FPL preferred to remain uninsured. This number climbs to 98 percent of those with incomes over 400 percent of FPL.
According to a study by Mark Pauly of The University of Pennsylvania’s Wharton Business School, this is a rational decision. “The minority of high risks among the middle class uninsured may gain,” he wrote, “but most uninsured will lose and, according to our estimates, will prefer to remain uninsured at the current penalty levels for violating the individual mandate.”
- Premiums are going up. This is not news if you’ve been following this blog for very long. Insurance industry analyst Robert Laszewski has been warning of this inevitable result for over a year. Insurance companies are losing money with the current premium levels due to sicker than usual enrollees not balanced out by enough healthy enrollees. Medical loss ratios that should be between 80 and 85 percent have been as high as 120 percent in many states. That means insurance companies pay out $1.20 for every $1.00 received.
Look for higher premium prices, higher deductibles (that already average $6,600 for individuals and $13,000 for families), and narrower networks, which means probably a change of doctors, and even hospitals. For those with large subsidies this may not matter. But for those who actually have to pay these premiums, the increases may be substantial. Even now, only 14% of those who enrolled through the healthcare.gov website are paying their own premiums without a subsidy.
(Next post: Things We Don’t Know)