Opinion: Daily Journal

It’s Going to Get Worse

Ever since the disastrous launch of the Obamacare insurance exchanges in October, supporters of the so-called Affordable Care Act have insisted that things were destined to get better.

They said that once Washington and the states got their respective websites working properly, people would begin to change their minds about Obamacare. Supporters said that increases in exchange enrollment in December were evidence that support was growing. They also said that in about half the states, the largest component of Obamacare — Medicaid expansion — had resulted in millions of Americans gaining access to health care for the first time.

No. What’s really going on with the implementation of President Obama’s signature program is that an arrogant, poorly informed class of social engineers, both inside and outside government, is in the process of doing considerable, perhaps lasting, damage to the nation’s health care system, insurance market, and labor market. Some realize this but think their ultimate goal — a government takeover of health care finance — is worth the cost. Others either believe their own propaganda or can’t bring themselves to admit error.

Here are some of the trends the latter group can’t see or won’t acknowledge:

• Millions of Americans, including about half a million North Carolinians, discovered in late 2013 that their health plans were not compliant with Obamacare’s onerous benefit mandates.

Contrary to the overstatements of some conservative critics, that doesn’t mean all these folks become uninsured. Instead, some of them got a reprieve when the president urged health insurers to renew the terminated policies for a final, transitional year — albeit with hefty premium hikes. Other consumers were forced to buy new, more expensive plans. Some signed up for Medicaid if eligible (see below). And, yes, some became uninsured.

• The vast majority of those newly enrolled in Obamacare exchange plans — somewhere between two-thirds and 89 percent — were previously insured, not uninsured.

Some of these exchange enrollees might well be better off. If they had chronic diseases and were in health plans with high premiums, the price controls and tax subsidies within the exchanges might be saving them money. In other cases, however, exchange enrollees are paying much more for health plans that actually have higher deductibles and skinnier provider networks than the plans they were forced out of.

By the way, the fact that the vast majority of exchange enrollees thus far were previously insured has profound implications for the future of the program. On Friday, Obamacare supporters greeted with delight the administration’s latest estimate that 3 million people had signed up for exchange plans so far, suggesting that reaching the original goal of 7 million enrollees by March 2014 was not so impossible.

Set aside for the moment the fact that many of these 3 million “enrollees” may not have paid anything and may not be in their insurer’s system yet. The claim betrays a fundamental understanding of the original goal. The Congressional Budget Office projected that by 2014, 7 million people would sign up for exchange plans and 9 million would be in Medicaid. CBO also projected that 2 million people would exit the individual insurance market by 2014, leaving a net decline of 14 million in the number of uninsured people due to Obamacare.

In other words, the vast majority of those 7 million exchange enrollees were expected to be previously uninsured. So the gap between Obamacare projection and reality is not 7 million vs. 3 million (the head count as of late January). The real comparison is somewhere between 1) 5 million (7 million projected exchange gain minus 2 million private plans lost) vs. 1 million (the upper-bound estimate of previously uninsured Americans enrolled in exchange plans so far); or 2) 5 million vs. 330,000 (the lower-bound estimate of previously uninsured Americans enrolled in exchange plans so far).

In short, the reality of Obamacare exchange enrollment to date remains wildly, disastrously different from what supporters originally predicted.

• Similarly, the claim that Medicaid rolls have grown by 4 million since October does not mean what Obamacare proponents think it means.

For one thing, more than half of those new Medicaid enrollees live in states such as North Carolina that didn’t accept Obamacare’s foolish Medicaid-expansion offer. It turns out that when the administration came up with the 4 million number, it didn’t distinguish between 1) enrollees made eligible by Medicaid expansion, 2) enrollees who were always eligible for Medicaid but got nudged by the ACA to sign up, and 3) enrollees who would have become eligible and signed up for Medicaid during 2013, anyway, even if the ACA didn’t exist.

Here’s something else to consider: it is highly likely that many of those new Medicaid enrollees would, in the absence of Medicaid expansion, have had private health plans. Although Obamacare proponents don’t like to admit it, the empirical evidence is strong that offering “free” coverage via Medicaid induces some people who would otherwise have been privately insured to remain on public assistance. This is called “crowding out.” Sometimes it happens because people actually drop private plans to go on Medicaid. More common, it seems, is that past Medicaid recipients who get reemployed and would otherwise go on an employer or individual plan just stay on Medicaid, instead.

Do people with low incomes really have private insurance to be crowded out? Liberal analysts assume the answer is no. That’s because they haven’t checked the data.

So what happens in 2014? Well, the number of people who see the health plans cancelled because of Obamacare will be higher, not lower, than in 2013 as the benefit mandates begin to apply to employer plans. Extrapolating from national estimates, upwards of a million North Carolinians could find themselves shopping for new, more-expensive plans in the exchanges. Or they will find themselves uninsured.

They’ll be furious. And Obamacare will become even bigger mess, both as public policy and as electoral politics.


Hood is president of the John Locke Foundation.