For the press, the debate over ObamaCare is over. There may be a few proverbial Japanese soldiers wandering on isolated islands yammering on about the failure of ObamaCare, but word will eventually filter down to them, too.Not a bad summary.
This assumption is so deeply embedded that it is impervious to new evidence that ObamaCare is an unwieldy contraption that is sputtering badly. Yes, ObamaCare has covered more people and has especially benefited those with pre-existing conditions (to be credible, Republican replacement plans have to do these things, as well), but the program is so poorly designed that, surely, even a new Democratic president will want to revisit it to try to make it more workable.
Enrollment is falling short. The Obama administration projects that it will have roughly 10 million people on the state and federal exchanges by the end of next year, a staggering climb-down from prior expectations. The Congressional Budget Office had predicted that there would be roughly 20 million enrollees. If the administration is to be believed, enrollment will only increase about another million next year from its current 9 million and only sign up about a quarter of the eligible uninsured.
Premiums are rising. Not everywhere, but steeply in some states. Indiana is down 12 percent, but Minnesota is up 50 percent. Health care expert Robert Laszewski points out that it’s the insurers with the highest enrollment and therefore the best information about actual enrollees that have tended to request the biggest increases — a sign that they don’t like what they’re seeing in their data.
Relatedly, the economics are shaky. According to a McKinsey Co. analysis, last year health insurers lost $2.5 billion in the individual market that ObamaCare remade. ObamaCare co-ops that were supposed to enhance choice and lower costs have been failing and almost all of them are losing money, a victim of the absurd rules (no industry executives on their boards, no raising capital in public markets, etc.) imposed on them by the law.
The problem with ObamaCare in a nutshell is that on one hand, by imposing motley regulations and mandates, it increases the price of health insurance, and on the other hand, by providing subsidies, it tries to hide the cost — but not enough.
Even the success that ObamaCare has had enrolling people should come with an asterisk. The Department of Health and Human Services announced earlier this year that nearly 11 million people have signed up for public health insurance — Medicaid or the children’s health program, CHIP — since 2013. If Medicaid is better than nothing (although this is harder to prove than you might think), it is substandard coverage that locks the poor into second-class care with limited access to doctors.
Not your imagination: ObamaCare premiums shot up by double digits for 2016
This may seem redundant, given all of the attention to huge price spikes in the ObamaCare exchanges in states like Minnesota (between 34-50% for most plans) and Mississippi (over 60%). Even CBS News has begun to wake up to the rapidly escalating costs of insurance in the so-called Affordable Care Act exchanges. Yet ObamaCare advocates argue that these price explosions are localized and not indicative of the overall direction of premium prices in 2016.From the (usually) sensible Megan McArdle: Cost of Cheapest Obamacare Plans Is Soaring
A new study shows that the price hikes are not just localized or anecdotal. Megan McArdle picks up on an analysis by Avalere that shows an average 13% increase in the cheapest plans for subsidized mandatory coverage. McArdle writes that this may not be the “death spiral” that critics predicted, but it’s an indication that the assumptions made by ObamaCare’s architects turned out to be dead wrong (via Guy Benson). . .
Last week, the Centers for Medicare and Medicaid Services released the 2016 premium data for the “benchmark” plans in the states using federal exchanges. Those are the second-lowest-cost Silver plans in each area, a benchmark chosen by health-care experts using arcane methods involving chicken entrails and a pound of dry rhinoceros horn.The also usually sensible Kevin Williamson disagrees: Obamacare Is Dead, It doesn’t work because it couldn’t work.
(Just kidding! They don’t use rhinoceros horn, which would be illegal. They use the ground-up bones of an ox slaughtered at midnight on the summer solstice.)
This data, which showed premiums rising an average of 7.5 percent, is useful. But it is limited. We’d like to think that this tells us “how much premiums went up,” but it’s not that simple.
. . .
Does this mean that Obamacare is in the early stages of a death spiral? We’re certainly not in death spiral territory now, and it’s too early to say whether we’re headed there, because the program is still evolving. As I say, the mandate has so far proven surprisingly irrelevant. But this year it goes up to a pretty hefty sum -- the higher of $695 per adult and $347.50 per child, or 2.5 percent of your annual income -- and perhaps people will look at the higher fees, sigh, and finally decide that they might as well pay a little bit extra and get some insurance. More realistically, perhaps they will freak out in spring of 2017, when they see what the mandate penalty does to their 2016 tax refund, and head over to the exchanges when the next open enrollment period finally rolls around.
Regardless of whether there is a President Cruz or a President Rubio in January 2017, regardless of the existence or size of a Republican majority in Congress, the so-called Patient Protection and Affordable Care Act (ACA) has failed. The grand vision of an efficient pseudo-market in health insurance under enlightened federal management — the heart of Obamacare — is not coming to pass. Obamacare, meaning the operating model that undergirded the law that Congress passed and President Barack Obama signed with great fanfare — is dead, and it will not be revived. What remains is fitful chaos.
A brief refresher:
The fundamental problem with ACA is that under it, insurance ceases to be insurance. Insurance is a prospective financial product, one that exploits the mathematical predictability of certain life events among very large groups of people — out of 1 million 40-to-60-year-old Americans, x percent will get in car wrecks every year, and y percent will be diagnosed with chronic renal failure — which allows actuaries and the insurance companies that employ them to calculate premiums based on risk, thus funding the reimbursement of certain expenses incurred by the insurance pool’s members. Insurance is, by its very nature, always forward-looking, considering events that have yet to come to pass but that may be expected and, to a reasonable extent, predicted with some level of specificity. Under ACA, insurance is retrospective. ACA mandates that insurance companies cover pre-existing conditions, meaning events that already have happened, which renders the basic mathematical architecture of insurance — the calculation of risk among large pools of people — pointless. Insurance ceases to be insurance and instead becomes something else, namely a very badly constructed cost-sharing program.
. . .
Obamacare’s partisans were confronted with the economic facts long before the law was even passed, and their answer was: “Never mind the economics, we’re the good guys, and you want poor people to die.” Democrats argued that Republicans literally wanted to kill poor people, that their plan was for the poor to “die quickly.” This is a habitual mode of discourse among progressives: Reality doesn’t matter; only the purity of Democrats’ motives matters. Obamacare is what it is: Another damned five-year plan based on wishful thinking and very little else.
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