Commentary: Not so fast with 'good news'
To hear administration officials and their supporters in the press tell it, this is a great time for Obamacare. People who signed up for coverage are actually paying for it; more insurance companies are joining exchanges; some consumers have more choices than originally envisioned. “The news surrounding the Affordable Care Act has been so good this week, it’s almost hard to know where to start,” wrote MSNBC’s Steve Benen in a recent post headlined “Everything’s Coming Up Aces for the ACA.”
Not so fast. Yes, Obamacare is a big help for those now receiving something substantial from the government — large subsidies for the lowest-income Americans who purchase coverage on the exchanges, free health care for people eligible for the expanded Medicaid program.
But for millions of other Americans, it’s a different story. In fact, one respected analyst worries that Obamacare, while helping some, is actually “creating a chronically uninsured class” of those ineligible for its taxpayer-paid assistance.
Of the much-discussed 8 million Americans who have signed up for Obamacare, the “vast majority ... are receiving financial assistance,” according to a new Department of Health and Human Services report. What that means is this: Of the 8 million, about 85 percent, or 6.8 million, actually paid for coverage. Of those, about 87 percent, or 5.9 million, receive taxpayer-paid subsidies to help them pay.
In other words, nearly everyone who has bought insurance through the Obamacare exchanges has done so with money from the government. And the subsidies are significant — an average of $264 a month, according to HHS. The average monthly premium is $346, according to the report, so minus the $264 subsidy, the average subsidy recipient is paying a net cost of $82 a month for coverage. The government pays the rest.
“It would appear from this data that it is the lowest income people who are most often signing up for coverage,” writes insurance industry analyst Bob Laszewski. “That explains why the average consumer subsidy is so high and the average net cost is so low.”
The problem is, for those who are not eligible for subsidies, or for those eligible only for smaller subsidies, Obamacare still presents higher premiums, higher deductibles and narrow networks of doctors and hospitals. “The Obamacare plans are unattractive to all but the poorest who get the biggest subsidies and the lowest deductibles,” writes Laszewski. “The working class and middle class are not getting access to attractive benefits.”
So they have not purchased coverage. The Democrats who created Obamacare planned to pressure them into doing so by imposing an individual mandate — a penalty euphemistically called a “shared responsibility fee” — on those who go uninsured. The idea was, the mandate would not only increase the coverage rate but also raise revenue for the federal government.
But now comes word that very few will pay the penalty. In a recent study, the Congressional Budget Office said that of the 30 million people estimated to be uninsured in 2016, only about 4 million will be required to pay. The rest — 26 million people — will be exempt from the mandate under various regulations issued by the Obama administration.
So this is one vision of Obamacare’s future: Lower-income Americans purchase insurance because they receive the biggest subsidies. Others with somewhat higher incomes are priced out of the Obamacare market. The individual mandate is meaningless. The net result is tens of millions remain without coverage. “Obamacare looks to be on its way to creating a chronically uninsured class,” says Laszewski.
That’s certainly not what Barack Obama promised when he said his plan would make health care “better for everybody.” It’s not what he promised when he said the Affordable Care Act would “cut the average family’s premium by about $2,500 per year.” It’s not what he promised when he said Obamacare would “bend the cost curve” of health care.
What happens now? After Democrats finish crowing about what a success Obamacare is, it’s likely they will argue that subsidies must be extended to more and more Americans to pay for coverage that Obamacare has made more and more expensive. Republicans will resist, but at the same time realize Obamacare has changed the health care system in ways that will be difficult to overturn and hard to fix.
And for those millions for whom Obamacare is a bad deal? They’re just out of luck.