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ACA Is Uninsuring the Insured

Summary:
The number of people with individual health-insurance coverage is shrinking. Despite 6 billion in federal subsidies to low-income households and well-capitalized insurers, 2.6 million fewer people had individual policies in March 2017 than in March 2016, a drop of nearly 15 percent. Despite 6 billion in federal subsidies to low-income households and well-capitalized insurers, 2.6 million fewer people had individual policies in March 2017 than in March 2016, a drop of nearly 15 percent. The most precipitous decline has occurred among people who pay their own premiums without government help. The number of those with unsubsidized coverage fell by nearly one-fourth between March 2016 and March 2017, from 11 million to less than 9 million. There are now nearly 3 million fewer people with

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The number of people with individual health-insurance coverage is shrinking. Despite $146 billion in federal subsidies to low-income households and well-capitalized insurers, 2.6 million fewer people had individual policies in March 2017 than in March 2016, a drop of nearly 15 percent.

Despite $146 billion in federal subsidies to low-income households and well-capitalized insurers, 2.6 million fewer people had individual policies in March 2017 than in March 2016, a drop of nearly 15 percent.

The most precipitous decline has occurred among people who pay their own premiums without government help. The number of those with unsubsidized coverage fell by nearly one-fourth between March 2016 and March 2017, from 11 million to less than 9 million. There are now nearly 3 million fewer people with unsubsidized individual coverage than in 2013, the year before the government began doling out Obamacare premium subsidies. If the current trend persists through December, the individual market as a whole will insure fewer people this year than it did in 2014.

And the decline isn’t limited to the individual market. There were 3.6 million fewer people with job-based coverage in December 2016 than in December 2013. While 8.4 million people received Obamacare premium subsidies last year, private coverage increased on net by only 1.7 million between December 2013 and December 2016.

While there are no perfect data, these numbers are far more precise than survey results, the standard source of coverage estimates. They derive from insurance-company regulatory filings compiled by Mark Farrah Associates and on reports issued by the Centers for Medicare and Medicaid Services. The MFA data capture the total number of people enrolled in individual policies through March 2017; CMS tells us how many people had exchange-based individual coverage through February 2017 and how many of them received subsidies. Subtracting the CMS numbers from the MFA data yields the number of people who have unsubsidized individual coverage. Data on the individual and small-group markets through December 2016 come from an analysis by the Heritage Foundation’s Edmund F. Haislmaier and Drew Gonshorowski, who also used the MFA data set. The decline in individual health-insurance coverage is almost never reported (NRO being a rare exception) and contradicts the prevailing Obamacare narrative. A recent New England Journal of Medicine editorial recited the received wisdom: “The ACA’s individual market structure — though not perfect — is sound and has succeeded in greatly expanding coverage. As 2017 began, the market was poised to leave behind the growing pains of the past few years. Then the President and Congress acted to create needless turmoil.”

Virtually every assertion in that passage is false. The individual market is not “sound”; it is contracting as rising premiums are pricing millions out of the market. Nor can it be credited with “greatly expanding coverage”; the individual-market coverage gains achieved by distributing subsidies to some have for the most part been offset by coverage losses in the individual and group markets among unsubsidized consumers. Obamacare was not “poised to leave behind the growing pains” in 2017; it was entirely predictable that those pains would worsen. 

And all this “needless turmoil” antedated the Trump administration. He took office during the closing days of the 2017 open-enrollment period. By then, the die was cast. 

The narrative nevertheless endures. Believing it requires indifference to millions of people who can no longer afford individual policies and to millions more who may forfeit their policies with the next round of rate hikes. For many of them, Obamacare has been a serial nightmare, producing policy cancellations, skyrocketing premiums and deductibles, and a narrowing choice of doctors before finally leaving them uninsured.

Obamacare is insuring more poor people and uninsuring millions of middle-income people. That suits the Democratic party and many congressional Republicans just fine. They measure social progress in the number of people receiving government assistance. Those struggling to pay their own way evoke little sympathy. Lawmakers of both parties, whose consciences were lacerated by CBO’s theory that millions would “lose” coverage under the GOP’s “repeal and replace” legislation (most of those “losses” the result of people voluntarily dropping insurance once the individual mandate was repealed) are unmoved that millions actually have lost coverage under the law they fought to preserve.

Legislators do, however, grieve over insurance-company losses. The NEJM editorial urged Congress to “bolster insurers’ confidence” through a “permanent reinsurance program” — a new entitlement to corporate welfare. 

It is a familiar story: Corporations get bailouts, the poor get benefits, and those in between get the bill. Government will tax people to subsidize insurance companies whose product they themselves can’t afford.

It is of course possible that Congress will set a different course. Republicans won elections by promising relief for Obamacare’s victims. That sentiment faded once they gained power. Perhaps they can revive it. Democrats could bolster their political brand by working to make health insurance accessible to those who used to be able to afford it.

Congress could start by relaxing the federal death grip on the regulation of the individual and small-group markets. Federal regulatory rigidities are driving prices higher and pushing insured people into the ranks of the uninsured. Relinquishing at least some regulatory authority to the states might produce more functional markets, where insurers can offer consumers the coverage they want at a price they can afford.

That is not where Congress appears headed. Their obsession with coverage numbers appears confined to those who qualify for Medicaid or Obamacare handouts; they are untroubled that those of less modest means are losing coverage.

Members of both parties instead hope to pass a relief package for the insurance industry. Once it becomes clear that insurers will raise their 2018 rates despite the bipartisan largesse, each party will blame the other for the higher premiums. Should Congress play out that script, the individual market will likely continue to shrink. 

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