With enrollment in the Obamacare exchanges now closed, Democrats and their friends in the media are ebullient. Obamacare is an enormous success, they say, and conservatives have been humiliated. On closer inspection, however, things seem decidedly less bullish for President Obama’s signature achievement.
Among the many exaggerations and inaccuracies the law’s defenders are touting, five stand out.
• First, they say that premium rates are down. In support of this, liberals cite research from the Congressional Budget Office (CBO), but they misinterpret it. In fact, the CBO’s most recent estimate of premiums shows a decline not from what they were in 2013, before the implementation of Obamacare, but rather from what CBO estimated they would be in 2014. Studies from many outlets have shown that rates have gone up since 2013, substantially for many people.
This is no mystery. Obamacare basically outlawed insurance underwriting, so rates must go up as healthy people pay the price for the sick. Insurers, moreover, have also increased deductibles and co-pays and narrowed doctor networks and drug formularies.
• Second, supporters claim that Obamacare exceeded the enrollment target promulgated by the CBO. This is questionable. The CBO last year projected 7 million enrollees, and the Obama administration now gloats that 8 million people selected a plan in the exchanges. But not everybody who selected a plan will pay for it. The best estimate right now is that about 15 percent of initial enrollees are not paying their first premiums. If that holds, paid enrollment will come in slightly under CBO’s 2013 prediction.
But there is more. CBO downgraded its forecast earlier this year from 7 million to 6 million, and this month declined to update it even after the “surge” of last-minute enrollees began. The reason: The prediction is an annual average. By this metric, Obamacare will struggle to hit 6 million, with enrollment so weak in the first quarter.
• Third, liberals claim that insurers are happy, pointing to recent earnings reports from the biggest companies. But this is a non sequitur. The insurers have become clients of government. Federal subsidies to exchange insurers this year will hit approximately $10 billion, thanks to a program called “reinsurance” that reimburses Obamacare exchange enrollees for excessive claims. As a point of reference, $10 billion just about equals the combined profits of the top five insurers in 2013. Moreover, the total subsidy could go even higher, thanks to another feature of Obamacare known as “risk corridors.” Insurers on the exchanges are enjoying private profits and socialized losses. Who wouldn’t be happy? What will really matter is how insurers feel in 2017, when reinsurance and risk corridors expire and the exchanges must stand on their own.
• Fourth, liberals claim the law is “working.” This omits the dozens of provisions that the president has suspended or delayed because they were not working—for budgetary or political reasons. The suspended or postponed provisions include the mandate that businesses cover full-time employees, the cancellation of noncompliant plans, and cuts to Medicare Advantage.
In fact, what is working is a very narrow segment of the law, the most politically salable part: the distribution of tax credits so people with low incomes can buy heavily subsidized insurance coverage. To say the law is working is like saying you “ate your dinner” when you gulped down your dessert and skipped the veggies. Just as your mother said you could not have one without the other, so the popular provisions of Obamacare are linked to the unpopular ones. Sooner or later, the administration will have to enforce the law—or watch a vast array of unintended side effects disrupt the national health care system.
• Fifth, the left assures us Obamacare cannot be repealed. This is particularly rich, considering all the provisions the administration itself has effectively repealed when it found them inconvenient.
Irony aside, Obamacare’s future is still very much in doubt. Whereas Medicare and Social Security were designed to benefit everybody sooner or later, Obamacare creates vast classes of winners and losers. It is to the losers that many of the suspensions are directed. But the losers will eventually have to suffer the harm that Obamacare is set to deliver. And that creates the political space for repeal.
Imagine Republicans win the presidency and a congressional majority in 2016. Does anybody doubt they will go after Obamacare with every tool available? If they do, parts of the law will surely survive, but the finished product will be so different from what exists now that Democrats will bemoan Obamacare’s “repeal.”