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.”
