Yesterday, Obamacare’s third open-enrollment period began. From November 1 to January 31, Americans without employer-sponsored or government insurance coverage will be able to purchase health plans for 2016.
It’s the third open-enrollment period for Obamacare. And it’s shaping up to be a challenge. According to the Obama administration, 10.5 million Americans remain uninsured. Department of Health and Human Services Secretary Sylvia Matthews Burwell has noted that these people “are going to be harder to reach” this time around.
That’s an understatement. Many individuals aren’t interested in what Obamacare’s exchanges are selling. Premiums and deductibles are surging as networks narrow. As a result, many Americans have decided that they might be better off financially by going without insurance next year — and just paying the ACA’s tax penalty for refusing coverage. And if enrollment stalls, then Obamacare may well, too.
The White House has steadily lowered expectations for this round of open enrollment. A few months ago, the Congressional Budget Office estimated that 20 million people would sign up for coverage through a state exchange or the federal exchange, HealthCare.gov, in 2016.
But in September, Secretary Burwell said that sign-ups would barely budge compared with this year’s numbers. “We believe 10 million is a strong and realistic goal” for 2016, she noted. That’s a mere 900,000 more than HHS expects to be enrolled at the end of 2015.
The administration calculates that there are about 28 million people in the exchanges’ target market — the 9.1 million who are already exchange customers, 8.5 million who have coverage off the exchanges, and the 10.5 million uninsured.
Now, it’s effectively admitting that it will end up enrolling barely more than one-third of those individuals.
People are avoiding the exchanges in large part because Obamacare has pushed the cost of insurance to new heights.
Premiums have jumped by double digits. In Minnesota, the largest insurer has hiked premiums by almost 50 percent, on average. The other four insurers selling on the state exchange will increase premiums by an average of 14 to 39 percent. Tennessee’s largestinsurer has boosted premiums by 36 percent, on average.
Oklahomans choosing their state’s benchmark plan — the second-cheapest “silver” plan — will pay 36 percent more, on average, than they did this year. Thosein Alaska, Montana, and New Mexico choosing the same type of plan will have to endure 25 percent increases.
President Obama has tried to ignore this stark reality. When insurers began announcing these massive rate increases, he told his supporters not to worry. State regulators, he said, would knock down such rate hikes.
That didn’t happen. In most cases, insurers were able to show regulators that they had lost significant amountsof money on their Obamacare plans in their first year — and would continue to do so if they didn’t increase their prices. In places like Florida and Oregon, state regulators ordered insurers to raise premiums even higher than they’d requested in order to reduce the risk that they’d go under.
High rates have already made health insurance unattractive to the young and healthy. This year, about 2 million fewer young people signed up than expected — a 40 percent miss. On the other hand, sign ups among the 55-and-overcrowd exceeded expectations by 29 percent.
Consequently, the insurance pool within Obamacare’s exchanges has been older, sicker, and far more expensive than insurers anticipated. A recent report from the Centers for Medicare and Medicaid Services showed that insurers lost $2.9 billion on the exchanges in 2014.
For many people, refusing to obtain coverage, as Obamacare orders, has actually been cheaper than purchasing a plan.
Overall out-of-pocket expenses for the uninsured averaged $409 a year before the ACA, according to a new study published by the National Bureau of Economic Research. But the average cost for the benchmark Silver plan was $2,458.
In other words, the average uninsured person would spend several times more on health care with insurance than without it — even after taking into account next year’s $695 or 2.5 percent of income whichever is greater, penalty for remaining uninsured.
As a result, the authors of the NBER report concluded, many uninsured “will prefer to remain uninsured at the current penalty levels for violating the individual mandate.”
And that’s already happened.
Half of the uninsured who were eligible for Obamacare subsidies didn’t enroll this year, according to the Kaiser Family Foundation. An analysis by Avalere Health found that Obamacare was popular only among low-income people who were eligible for the highest level of subsidies. Only a small fraction of people in higher income groups enrolled.
To top it off, those folks who do venture into Obamacare’s exchanges may find that their previous insurer has gone out of business.
So far, 11 of the 23 non-profit insurance companies Obamacare set up have failed, despite $2.4 billion in taxpayer dollars. Some of them — such as Colorado HealthOP and Kentucky Health Cooperative — were the largest insurers in their states. That means more than half a million people will lose their health plans this year.
Obamacare was passed into law in March 2010 and the exchanges went into effect in 2013.But its prognosis today looks worse than ever. The law is flatlining, and the Obama administration knows it.