Collapse of Obamacare a Matter of When, Not If
Source: OC Register
Two federal agencies just released some new research that probably isn’t going over too well in the White House.
In its most recent baseline projections, the Congressional Budget Office estimated that 18 million people would have coverage through Obamacare’s exchanges in 2025. That’s 4 million fewer than it projected just last year.
The Centers for Medicare and Medicaid Services, meanwhile, recently revealed that one in four people who signed up for coverage at the beginning of 2015 had dropped it by year’s end.
The rapid decline in both actual and expected coverage spells trouble for the viability of Obamacare’s exchanges. The question is no longer if they’ll collapse but when.
The White House has tried to stay positive. This year’s open enrollment period yielded 12 million enrollees, up 2.6 percent from last year. That prompted Kevin Counihan, the CEO of HeathCare.gov, to boast, “We knocked the lights out this year.”
His celebration may be premature. If last year’s 25 percent attrition rate holds true again this year, total enrollment could be just 9.5 million – barely 700,000 more people than 2015.
And there’s good reason to believe that this year’s attrition rate will be even higher.
Premiums have climbed significantly this year. Exchange shoppers in 17 states are facing average premium increases of 20 percent or more in 2016. According to Health and Human Services, the average monthly premium for all plans purchased on HealthCare.gov is $408 – a 9 percent increase over last year.
Deductibles have also climbed steadily. According to the online insurance marketplace HealthPocket, the average deductible for a silver plan – the most popular option on the exchanges – was $3,117 for individuals and $6,480 for families. Bronze plans, which often come with the lowest premiums, saw average deductibles reach $5,731 and $11,601 for the same groups.
Those rising costs may cause many enrollees to drop their coverage as the year goes on. Even those who can afford higher premiums may decide they’re not worth it if they’ll still have to pay out large amounts to meet their deductible.
The data seem to show that many young people are making just that calculation. Americans ages 18 to 34 comprised just 28 percent of enrollees this year – well below the 38 percent goal.
The reluctance of young Americans to enroll in exchange plans is a problem. The law needs premiums from young, generally healthy Americans to subsidize coverage for older patients, who generally need more care and thus are costlier to insure.
Obamacare’s individual mandate was supposed to make sure that the exchange pool had plenty of young people. Under the law, Americans who fail to sign up this year face fines of $695 or 2.5 percent of their income, whichever is greater.
For many young people, this one-time fee is much lower than the cost of coverage, which can run thousands of dollars a year.
The lack of young people in the exchanges is even more problematic because the rest of the exchange pool has turned out to be sicker than insurers expected.
Blue Cross Blue Shield recently analyzed its members’ claims data over the past two years. Those who enrolled in exchange plans had higher rates of illnesses like hypertension, diabetes and Hepatitis C than did folks with coverage pre-Obamacare.
To compensate, insurers may be forced to hike premiums even higher – or to leave the exchanges because of unsustainable losses.
Insurers have started instituting “narrow” networks – that is, limiting the number of doctors and hospitals that a given policy will cover – as part of their effort to control costs. In 2015, four out of 10 exchange plans granted consumers access to barely a quarter of local doctors. And according to a new report from McKinsey, the percentage of Americans with access to only narrow provider networks tripled from 2015 to 2016.
This year’s exchange enrollment figures are nothing to brag about. If the Obama administration disagrees, they can take it up with their colleagues elsewhere in the federal government.
Filed Under: ACA/Health Reform