Normally, market competition is good for consumers. More competition generally means competitors are battling each other to lower their prices and/or raise the quality of their goods. But when it comes to Obamacare, the market is working backwards, at least for people receiving health insurance subsidies through the exchanges. The more competitive the marketplace, often the more people have to pay for insurance.
How did this happen?
The Affordable Care Act, aka Obamacare, created a series of exchanges where people can shop for health insurance if they don’t already receive it from the government (e.g. Medicare or Medicaid) or from their employer. The exchanges are a pro-market approach to healthcare reform. But they aren’t a simple market, by any means. In part, they are complicated because most people purchasing insurance through the exchanges receive subsidies. If you earn less than 400% of the federal poverty limit, you’ll probably qualify.
Earlier this year the U.S. Supreme Court heard arguments in King v. Burwell, a case critical to the future of the Affordable Care Act (ACA, or so-called Obamacare). Readers interested in the details of the case should find them elsewhere. Suffice it to say here that the case concerns whether individuals can receive tax credits for buying health insurance on exchanges established by the federal government, though the text of the ACA indicates such subsidies are provided for those buying coverage through an “exchange established by the State.”
The case has the potential to invalidate substantial subsidies now being provided by federal taxpayers to millions of Americans using federal exchanges in 37 different states. Given the uncertainty created by the pending case, legislators on both sides of the aisle are considering how to react to various possible scenarios arising from a court decision. The House and Senate each recently passed budget resolutions allowing budget targets to be revised in the event of subsequent legislation modifying the ACA. The Senate resolution specifies that such legislation must be deficit-neutral.
Has the effort peaked to sign up uninsured Americans for coverage? The announcement that the nonprofit organization Enroll America is laying off staff and redirecting its focus in the face of funding cuts comes amid inconsistent sign-ups during the second Affordable Care Act open-enrollment period and concerns about affordability.
A recent New York Times analysis compared Kaiser Family Foundation estimates of potential enrollees with sign-up data from the Department of Health and Human Services. While some states that signed up few people in 2014 recovered during the 2015 open enrollment, other states lagged: “California, the state with the most enrollments in 2014, increased them by only one percentage point this year, despite a big investment in outreach. New York improved by only two percentage points. Washington’s rates are unchanged.”
Most states could not post consistent gains in both open-enrollment periods. An official from Avalere Health, a consulting firm, told the Times that she was “starting to wonder if we’ve overestimated the whole thing.”
The Centers for Disease Control and Prevention (CDC) has released early estimates of health insurance and access to health care for January through September 2014. The National Health Insurance Survey (NHIS) is (in my opinion) the most effective survey of health insurance, because it asks people three different but important questions: Are they uninsured at the time of the survey? Have they been uninsured for at least part of the year? Have they been uninsured for more than a year?
As shown in Figure 2, the proportion of long-term uninsured is about the same as it was circa 2000. The proportion of short-term uninsured has shrink a little in Obamacare’s first year.
New analysis from Avalere finds that while exchanges have succeeded in enrolling very low-income individuals, they continue to struggle to attract middle and higher income enrollees.
Specifically, as of the close of the 2015 open enrollment period, exchanges using HealthCare.gov had enrolled 76 percent of eligible individuals with incomes between 100 and 150 percent of the federal poverty level (FPL) or $11,770 to $17,655. However, participation rates declined dramatically as incomes increase and subsidies decrease. For instance, only 16 percent of those earning 301 to 400 percent FPL picked coverage through an exchange, even though they may be eligible for premium subsidies.
“People receiving more generous subsidies are expected to enroll in the exchanges at higher rates. However, participation levels decline as incomes increase, even among individuals who would be eligible for both premium subsidies and cost-sharing reductions,” said Elizabeth Carpenter, director at Avalere.
It’s spring in Washington, and time to resume one of the capital’s favorite sports. No, not baseball, but throwing mud at the Supreme Court. Pending cases include the legal status of same-sex marriage and whether the IRS can provide billions of dollars in Obamacare subsidies without explicit congressional authorization. Partisans have launched a preemptive bid to undermine the legitimacy of the forthcoming decisions by accusing the court of “activism” for involving itself at all.
These increasingly transparent attempts to discredit the court should be rejected.Every case involving plausible abuses of power requires judicial engagement — conscientious, impartial truth-seeking, grounded in evidence — rather than reflexive deference to the political branches.
Take the Obamacare case. At issue in King v. Burwell is a section of the Affordable Care Act concerning tax credits for buying health insurance from government-operated healthcare exchanges. Congress wanted states to set up their own exchanges, but it lacks constitutional authority to force them. So Congress opted for a stick-and-carrot approach, authorizing tax credits for insurance policies purchased “through an Exchange established by the State.” As a backup, the ACA directed federal bureaucrats to set up federally operated exchanges in states that declined to set up their own.
Heather Higgins: The thing that I do that spends actually most of my time and is not something that is terribly sexy for donors, but that I think is hugely important is work on Obamacare. That’s kind of how I backed into the political stuff. I had been very involved in 2009 in trying to help fund and orchestrate and message the entire battle against Obamacare because there was no infrastructure on the right that was really set up to do that. And then coming out of that had the epiphany that since Reid and Pelosi were not moving, maybe the way to do that was to go into the Massachusetts race for Ted Kennedy’s seat, that special election which was being run on the issues that had polled well in September, which were the national security issue and the economy, and instead redefine the race as being about healthcare and the 41st vote, which every political consultant I took that to thought that I was on drugs and that that was a waste of money. So we wound up being the only independent expenditure in Scott Brown’s first race to make it be about healthcare and the 41st vote. [Applause.] Thank you.
And then in the summer of 2010 I was appalled that nobody was talking about Obamacare so we created the Repeal Pledge which is actually the only pledge about Obamacare that still exists of the ones that were started then; and coming out of the 2010 election where we had used it, I looked for the group to join to think strategically about not working at cross purposes between what the Senate might do, the House might do, the court case from Florida that was then rising up to the Supreme Court, what outside grassroots group could do, and there was none. So I’ve started something called the Repeal Coalition which meets every 3 to 4 weeks in the Capitol. It has leadership staff from both the House and the Senate. It has a lot of staff from different Members and Senators. It has a lot of outside groups that are policy wonks to grassroots groups, and we talk about all the things we wish that would get done that don’t get done, and we talk about things that sound like good ideas and figure out if they’re dumb ideas and try and prevent dumb things happening. There is an overriding purpose to this which is remembering, of course, the long-term goal.
Obamacare reached age 5 on Monday [1]. As I’ve pointed out earlier, this anemic child is not exactly a picture of health, falling behind the lofty expectations set for it on many dimensions. But the one bright spot for its proud parents relates to how much the law has reduced the number of uninsured. The president’s Council of Economic Advisors ecstatically announced last December: “the drop in the nation’s uninsured rate so far this year is the largest over any period since the early 1970s.” A little perspective is in order.
First, taking the CEA’s figures at face value (which my chart below does), this decline amounts to a 2.8 percentage point net reduction in the rate of being uninsured, that is, above and beyond the decline that would have occurred anyway according to CBO [2]. It may well be the biggest one-year decline since the 1970′s, but CBO’s expectation at the time the law was passed was that uninsured risk would drop by 6 percentage points in 2014 alone. Even as late as May 2013, CBO was expecting the net decline to be 3.5%. In short, in its first year, Obamacare scored 46% if we use CBO’s original projection as the scoring standard and 79% if we used the May 2013 projection. Clearly we would like this child to perform better than that in future years. But that would require the number of newly covered Americans to increase an additional 79% this year compared to last year.
Reality check: that is certainly not going to happen. Charles Gaba at ACASignups estimates that estimated paid sign-ups on the Exchanges are only 10.5 million so far, compared to 7.06 million last April [the original post stated 10 million, see Update #1 for explanation]. That’s only a 49% increase, suggesting Obamacare will fall even further behind CBO expectations for 2015 [the original post stated 42%, see Update #1 for explanation]. Medicaid won’t fill the gap, since Medicaid evidently is growing by about 300,000 persons per month. Even if we assume all of these are uninsured, that would reduce the uninsured rate by only 0.1% monthly, or 1.2% over 2015 as a whole. That provides only about half of what’s needed to keep pace with CBO projections, leaving the Exchanges to fill the gap. But as we’ve seen, the Exchanges are lagging behind.
The landmark 2006 Massachusetts health-care law that inspired the federal overhaul didn’t lead to a reduction in unnecessary and costly hospitalizations, and it didn’t make the health-care system more fair for minority groups, according to a new study that may hold warnings for the Affordable Care Act.
Massachusetts’ uninsured rate was cut by half to 6 percent in the years immediately following the health-care law signed by then-Gov. Mitt Romney. Blacks and Hispanics, who have a harder time accessing necessary medical care, experienced the largest gains in insurance coverage under the Massachusetts law, though they still were more likely to be uninsured than whites.
The new study, published in the BMJ policy journal, examined the rates of hospitalizations for 12 medical conditions that health-care researchers say wouldn’t normally require hospitalization if a patient has good access to primary care. These include hospitalizations for minor conditions like a urinary tract infection, or chronic conditions that would require repeat primary care visits over the course of a year.
“It’s thought to be a good measure and one of the few objective ways of looking at access [to health-care provider] in the community,” said Danny McCormick of Harvard Medical School, the study’s lead author.
The New York legislature voted down Gov. Andrew Cuomo’s proposal to tax health insurance policies to fund the state’s Obamacare exchange, calling the fees system used by the Obama administration and other states counterintuitive.
The shrinking number of state-run Obamacare exchanges are facing a new problem this year — how to fund their ongoing operations now that start-up grants from the federal government are running out.
In New York, like many other states, Cuomo proposed a tax on health insurance premiums to fund the state-run exchange’s operations. That tactic comes with its own concerns: some states, such as Hawaii, have smaller-than-expected enrollment and the per-policy fees aren’t bringing in enough money.
Rhode Island is considering adopting a tax itself, but due to small enrollment in the tiny state, fees per Obamacare enrollee would likely climb higher than $30 every month, according to Modern Healthcare. Even California, which boasted the highest enrollment of any state in 2014 (but has recently been dethroned by Florida), has had to raise its monthly premium tax.
But according to the New York Post, members of New York’s state legislature refused the extra tax on premiums because the plan would drive up the cost of health insurance for Obamacare customers, defeating the purpose of the exchange and its often-subsidized coverage.