No one expects President Obama to say much about ObamaCare in his State of the Union Address on Tuesday — because there isn’t much good to say about his signature achievement.
Yes, we get a perfunctory apology for those Web site “glitches,” plus a suitably uplifting story about how someone finally found health insurance thanks to the Affordable Care Act. But it’s just too risky for him to say much more, because “the State of ObamaCare” is growing ever more troubled.
For starters, it’s falling far short of the goal of universal coverage. The White House admits that only about 2.2 million people have signed up for health insurance through the program so far — but even that number’s padded: It includes all who’ve “picked” a health plan, even if they haven’t yet paid for it, sort of like Amazon counting every item a shopper puts in their “cart” as a sale. So far, just 1.5 million have actually completed the ObamaCare checkout, including payment. Worse, surveys indicate that less than a third of those enrolling were previously uninsured.
Another 3.9 million people have been enrolled in Medicaid, though it is not clear how much of that’s a direct result of ObamaCare’s expansion of the program.
Even using the most optimistic reading of these figures, fewer than 11 percent of uninsured Americans have gotten coverage because of the ObamaCare law; most likely, fewer. This is what we’re getting for the $2.7 trillion that ObamaCare will cost over the next 10 years?
Plus, we should subtract the roughly 500,000 Americans who, by the White House’s own count, have lost insurance because of ObamaCare. They’re some of the 5 million to 10 million Americans whose plans got canceled because they didn’t meet ObamaCare standards (despite the president’s promises that “you’ll be able to keep your health-care plan, period”). Most of these victims ultimately found new plans, though they might have been more expensive or no longer included their current doctor.
Yet that’s just the tip of the iceberg, because those policy-killing rules will hit another part of the market over the course of this year — namely, the “small group” market, where employers now buy health policies that cover about 78 million Americans. Many of those with cancelled plans will ultimately end up with similar, if more expensive, employment-based policies, but some are likely to simply wind up uninsured.
Universal coverage? I think not.
Then there’s the bad news about who is enrolling in ObamaCare plans — or rather, who isn’t: not enough of the young and healthy folks that the program needs to overpay for insurance so as to offset the costs of covering older and sicker people.
If the insurance pool is composed largely of people who use more (and more expensive) care, insurance prices will have to rise to cover their costs. That rate hike will then cause even more young and healthy people to drop insurance, leaving the pools even older and sicker than before. That raises premiums yet again, leading the healthiest remaining folks to drop out, and so on. Actuaries call this the “adverse selection death spiral.”
To avoid the death spiral, the Obama team estimated that it needs roughly 38 percent of people buying coverage via the exchanges to be under age 35. But data the administration released this month suggest that it’s turning out to be just 24 percent so far.
Data from individual states appears equally troubling. In New York, only 27 percent of exchange enrollees are 35 or younger, while 53 percent are over age 45. In New Jersey, 35-and-unders made up only 23 percent of enrollees; in Connecticut, less than 20 percent.
Oh, and a Reuters survey finds that new enrollees are also less healthy than ObamaCare’s designers hoped, too. Humana, one of the nation’s largest insurers, reports that so far enrollment in its exchange-based plans has been far “more adverse than previously expected.”
Worried about the insurance companies taking a bath on this? Don’t: ObamaCare’s designers set up a $25 billion reinsurance fund to protect insurers from losses due to adverse selection, funded by a $63-a-year tax . . . er, fee on all health policies.
So the “death spiral” may well leave ObamaCare exchanges covering far fewer Americans than planned, but the insurance industry will be OK because we’ll essentially be bailing it out.
This on top of the fact that ObamaCare already directs more than $1 trillion of taxpayer funds to insurance companies in the form of subsidies to help people buy their products — products that the law mandates that people and companies purchase. You can’t say that ObamaCare has no winners.
But those winners won’t include most of the rest of us, who’ll end up paying higher taxes and higher premiums, while getting less health care.
Listen as closely as you like on Tuesday, but I suspect the president won’t be saying much about this. And, really, can you blame him?
Michael Tanner is a senior fellow at the Cato Institute