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Tags: obamacare | healthcare | prices | hospitals

Obamacare's Marketplace Embarrassment Stretches on For Another Year

Obamacare's Marketplace Embarrassment Stretches on For Another Year
U.S. President Barack Obama (R) presents the Medal of Freedom to then-Vice-President Joe Biden during an event in the State Dinning room of the White House - Jan. 12, 2017  - Washington, D.C. (Olivier Douliery-Pool/Getty Images)
 

Sally Pipes By Friday, 12 November 2021 03:37 PM Current | Bio | Archive

Obamacare's insurance exchanges have begun selling plans for 2022. If history is any guide, open enrollment -- which runs in most states from November 1 through January 15 -- will be a resounding disappointment, at least compared to what Americans were promised when Obamacare became law.

Since the exchanges opened for business eight years ago, they have underperformed by almost every measure. Not only have fewer Americans signed up for coverage than even the law's champions projected, but the exchanges have also cost taxpayers far more than expected.

Democrats are trying to cover up these failings by throwing yet more money at the program through the massive "Build Back Better" bill currently being debated by Congress.

But more money won't fix the core problems that have plagued Obamacare's marketplaces since their inception.

Take overall enrollment trends. In 2010 -- just a few months after Obamacare became law -- the Congressional Budget Office projected that enrollment in the exchanges would exceed 21 million by 2016 and reach 24.6 million by 2020.

In reality, 12.6 million Americans enrolled in 2016. Since then, sign-ups have actually fallen, totaling just 11.4 million last year -- more than 50% below the CBO's estimates. The number of people who were actually covered by an exchange policy and had paid their premiums was even smaller, averaging 10.4 million in 2020.

At the same time, the cost of insuring those who did purchase coverage through the marketplaces has exceeded early estimates. A recent analysis by the American Action Forum found that, for 2014 through 2020, annual per-enrollee costs were an average of $830 higher than projected.

In short, Obamacare exchange policies have proven less popular and more expensive than even the nonpartisan CBO expected.

The law's many cost-inflating mandates are largely to blame.

A provision known as guaranteed issue, for example, requires exchange plans to offer coverage to all patients, regardless of their age or health status.

Community rating forbids insurers from charging older patients, who are generally costlier to insure, any more than three times what they charge younger ones, who typically have lower claims costs.

The law also requires that exchange plans cover a long list of "essential health benefits," from substance use disorder services to psychotherapy and pediatric vision care, regardless of whether beneficiaries want or need them.

Together, these rules have eliminated some of the most basic strategies insurance companies have for controlling costs and managing risk. And they've effectively outlawed low-cost, short-term, and bare-bones plans.

Insurers have responded to these mandates by hiking rates. In 2017, average monthly individual premiums were $476 -- more than double the $232 they were in 2013, the year before the marketplaces launched.

Nearly three-quarters of exchange plans also limit beneficiaries to narrow networks of participating providers -- another tactic insurers use to keep their costs down.

As a result, exchange coverage is unaffordable without significant government subsidies.

A new study in the journal Health Affairs found that, in 2019, half of middle-class households would have paid 11.3% or more of their income for the least expensive bronze exchange plan.

Among Americans ages 55 to 64, half would have paid at least 18.9% of their income for this plan.

Democrats don't want to address the root causes of sky-high premiums. They're trying to obscure them with more taxpayer money.

Earlier this year, Congress and the administration made those with incomes above 400% of the poverty level eligible for subsidized exchange coverage for the first time -- and made the subsidies for everyone with income below that line more generous. Democrats are trying to extend those subsidies through 2025 as part of their "Build Back Better" plan.

In effect, Democrats want to pay Americans to purchase coverage that, as years of evidence makes clear, patients wouldn't buy with their own money.

Not only is this strategy wasteful, but it also delays the important work of fostering an insurance market that provides consumers with health plans they want and can afford. But it is in line with the ultimate goal of most progressives -- Medicare for All and a complete government takeover of the healthcare system.

Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.

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SallyPipes
In effect, Democrats want to pay Americans to purchase coverage that, as years of evidence makes clear, patients wouldn't buy with their own money.
obamacare, healthcare, prices, hospitals
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2021-37-12
Friday, 12 November 2021 03:37 PM
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