October 20, 2015

Obamacare into 2016 Showing More Signs of Failure

  • The Obama administration cut in half the projections for how many people would be enrolled in Obamacare next year.

  • Four of Obamacare’s co-ops failed in just one week. So far, more than a third of the 23 co-ops have collapsed, and more are in trouble.

  • Going into next year, Obamacare continues to threaten the health insurance families rely on.

Obama Administration Lowers Expectations

When the Democrats’ health care law passed, CBO estimated that the Obamacare exchanges would grow to 21 million people in 2016. It repeated that estimate in March. Last week, the Department of Health and Human Services tried desperately to lower expectations for the 2016 open enrollment period – saying it expects to get only halfway to CBO’s number. The department now predicts that between 9.4 and 11.4 million people will sign up, with a midpoint estimate of 10.4 million. HHS Secretary Burwell said that 10 million enrollees is “a strong and realistic goal.” Hitting the new target will require a paltry enrollment bump, since the administration says there will be 9.1 million signed up at the end of this year. The announcement follows Secretary Burwell’s comment in September that this year’s open enrollment “is going to be tougher than last year.”


These low projections are especially noteworthy given the tax penalties the Obama administration will levy on those who do not have insurance in 2016. The minimum penalty for this year is 2 percent of household income above about $10,000 or $325 per adult and $162.50 per child, whichever is higher. For next year, the fine rises to 2.5 percent of household income above $10,000 or $695 per adult plus $347.50 per child.

Writing in Forbes last week, Avik Roy noted: “The ACA’s enthusiasts have long held fast to the belief that Americans would come to love the health law as they encountered it in real life. That has manifestly not happened.” The Obama administration’s announcement last week demonstrates that even though coverage is mandated and is subsidized for many people, Americans are still not interested in signing up for Obamacare.

Obamacare’s CO-OPs Fail Their Members

Some of the architects of Obamacare originally wanted a “public option” that would demonstrate the efficiency and affordability of government-run, non-profit health insurance. While Obamacare did not include a public option in the end, it did include a compromise: Consumer Operated and Oriented Plans, or CO-OPs. These were supposed to allow for new health insurance companies that focused on members’ needs, rather than on profits. Twenty three CO-OPs were created. More than a third of them, however, have already failed.

In the week from October 9 to 16, CO-OPs in four states announced they would close: Kentucky; Tennessee; Colorado; and Oregon. Coming just two weeks before the start of the open enrollment season, the failure of each of these CO-OPs will leave their customers scrambling to figure out new coverage – probably at higher cost.

HC paper table

These are just the latest failed CO-OPs. CoOpportunity in Iowa and Nebraska was liquidated at the end of February. Louisiana Health Cooperative announced it was winding down in July, and Nevada announced the same thing a month later. The largest CO-OP in the country, Health Republic in New York, was ordered to shut down last month. The HHS inspector general reported in July that enrollment was substantially below expectations for 13 of the 23 CO-OPs; and 21 of the 23 had incurred net losses last year.

President Obama promised that his massive restructuring of the health care industry would give more people insurance. In reality, the law continues to disrupt Americans’ health care at every turn, while failing to cover anywhere near as many people as its supporters predicted.

Issue Tag: Health Care