More Evidence Obamacare Is Underperforming

1. CMS released data yesterday showing 2015 exchange enrollment is 30 percent below projections the government made in 2012.
2. Evidence of significant premium increases for 2016 means exchange enrollment numbers are likely to continue to underperform CBO’s already downgraded estimates.

In July 2012, CBO projected that there would be 14 million people with exchange plans this year, growing to 23 million in 2016. Enrollment data released yesterday by the Centers for Medicare and Medicaid Services indicates that 10 million people were enrolled in coverage as of March 31, 2015. That’s nearly 30 percent fewer people than in CBO’s July 2012 estimate.

In February 2014, CBO first lowered its projection of 2015 exchange enrollment to 13 million people. In its January 2015 baseline, CBO further dropped this projection to 12 million people enrolled in exchange coverage during the year. Just two months later, in its third update of Obamacare’s effect, CBO lowered its 2015 exchange enrollment projection yet again, to 11 million people.

Yesterday’s report shows that CBO’s latest downgrade of 2015 exchange enrollment was still too optimistic. Given the large attrition in exchange enrollment throughout 2014, as many people stopped paying premiums, the average enrollment in Obamacare’s exchanges will likely drop below 10 million people for this year. Despite a consistent lowering of expectations, people continue to show us that they value Obamacare far less than the government expects them to.

Middle Class Shunning Exchange Coverage

It was inevitable that Obamacare’s many mandates and regulations would substantially increase the price of insurance. So the health care law contained two types of subsidies for people using state-established exchanges, to lower their out-of-pocket expenses. Despite the clear text of the law, the administration issued a rule allowing these subsidies and corresponding tax penalties in all exchanges. In a few weeks, the Supreme Court will rule on the legality of subsidies in states with a federal exchange.

Even if the court finds the subsidies permissible, they are only generous to people earning between 100 and 200 percent of the federal poverty level. The subsidies do little to make the mandate-laden, high-deductible, narrow-network coverage appealing to Americans in the middle class. As a result, most people in the middle class who are eligible for exchange coverage do not find it worth the cost. The health care consulting firm Avalere has found that only two percent of all eligible people earning more than four times the poverty level have enrolled in Obamacare exchange plans.

Higher 2016 Premiums Will Lower Enrollment Expectations Even Further

On June 1, the Department of Health and Human Services released information on premium requests by insurers for Obamacare plans in 41 states and the District of Columbia. Insurers in these states requested double-digit increases on 676 individual and small group plans, covering well more than half of all people enrolled in Obamacare plans in these states. In most states, insurers with large market shares have proposed rate increases of more than 20 percent for next year.

Insurers are consistently reporting that an older and sicker population enrolled in Obamacare plans than they anticipated. This is further evidence that relatively young and healthy people are deciding to forgo Obamacare’s expensive coverage. As premiums increase, Obamacare coverage will look even worse to people.

In CBO’s most recent analysis, the agency projected that there would be 21 million exchange enrollees in 2016. While that would be a huge jump in enrollees from this year, it’s two million fewer than CBO was predicting just a few years ago. When the agency releases its next estimate of Obamacare exchange enrollment, odds are we will get a fourth straight downgrade – likely the biggest one yet.