Oba­macare not good news

The Standard Journal - - Commentary -

To hear ad­min­is­tra­tion of­fi­cials and their sup­port­ers in the press tell it, this is a great time for Oba­macare. People who signed up for cov­er­age are ac­tu­ally pay­ing for it; more in­sur­ance com­pa­nies are join­ing ex­changes; some con­sumers have more choices than orig­i­nally en­vi­sioned.

“The news sur­round­ing the Af­ford­able Care Act has been so good this week, it’s al­most hard to know where to start,” wrote MSNBC’s Steve Be­nen in a re­cent post head­lined “Ev­ery­thing’s Com­ing Up Aces for the ACA.”

Not so fast. Yes, Oba­macare is a big help for those now re­ceiv­ing some­thing sub­stan­tial from the govern­ment -- large sub­si­dies for the low­est-in­come Amer­i­cans who pur­chase cov­er­age on the ex­changes, free health care for people el­i­gi­ble for the ex­panded Med­i­caid pro­gram.

But for mil­lions of other Amer­i­cans, it’s a dif­fer­ent story. In fact, one re­spected an­a­lyst wor­ries that Oba­macare, while help­ing some, is ac­tu­ally “cre­at­ing a chron­i­cally unin­sured class” of those in­el­i­gi­ble for its tax­pay­er­paid as­sis­tance.

Of the much-dis­cussed 8 mil­lion Amer­i­cans who have signed up for Oba­macare, the “vast ma­jor­ity ... are re­ceiv­ing fi­nan­cial as­sis­tance,” ac­cord­ing to a new Depart­ment of Health and Hu­man Ser­vices re­port. What that means is this: Of the 8 mil­lion, about 85 per­cent, or 6.8 mil­lion, ac­tu­ally paid for cov­er­age. Of those, about 87 per­cent, or 5.9 mil­lion, re­ceive tax­payer-paid sub­si­dies to help them pay.

In other words, nearly ev­ery­one who has bought in­sur­ance through the Oba­macare ex­changes has done so with money from the govern­ment. And the sub­si­dies are sig­nif­i­cant -- an aver­age of $264 a month, ac­cord­ing to HHS. The aver­age monthly pre­mium is $346, ac­cord­ing to the re­port, so mi­nus the $264 sub­sidy, the aver­age sub­sidy re­cip­i­ent is pay­ing a net cost of $82 a month for cov­er­age. The govern­ment pays the rest.

“It would ap­pear from this data that it is the low­est in­come people who are most of­ten sign­ing up for cov­er­age,” writes in­sur­ance in­dus­try an­a­lyst Bob Laszewski. “That ex­plains why the aver­age con­sumer sub­sidy is so high and the aver­age net cost is so low.”

The prob­lem is, for those who are not el­i­gi­ble for sub­si­dies, or for those el­i­gi­ble only for smaller sub­si­dies, Oba­macare still pre­sents higher pre­mi­ums, higher de­ductibles, and nar­row net­works of doc­tors.

“The Oba­macare plans are unattrac­tive to all but the poor­est who get the big­gest sub­si­dies and the low­est de­ductibles,” writes Laszewski. “The work­ing class and mid­dle class are not get­ting ac­cess to at­trac­tive ben­e­fits.”

So they have not pur­chased cov­er­age. The Democrats who cre­ated Oba­macare planned to pres­sure them into do­ing so by im­pos­ing an in­di­vid­ual man­date -- a penalty eu­phemisti­cally called a “shared re­spon­si­bil­ity fee” -- on those who go unin­sured. The idea was, the man­date would not only in­crease the cov­er­age rate but also raise rev­enue for the federal govern­ment.

But now comes word that very few will pay the penalty. In a re­cent study, the Con­gres­sional Budget Of­fice said that of the 30 mil­lion people es­ti­mated to be unin­sured in 2016, only about 4 mil­lion will be re­quired to pay. The rest -- 26 mil­lion people -- will be ex­empt from the man­date un­der var­i­ous reg­u­la­tions is­sued by the Obama ad­min­is­tra­tion.

So this is one vi­sion of Oba­macare’s fu­ture: Lower-in­come Amer­i­cans pur­chase in­sur­ance be­cause they re­ceive the big­gest sub­si­dies. Oth­ers with some­what higher in­comes are priced out of the Oba­macare mar­ket. The in­di­vid­ual man­date is mean­ing­less. The net re­sult is tens of mil­lions re­main with­out cov­er­age. “Oba­macare looks to be on its way to cre­at­ing a chron­i­cally unin­sured class,” says Laszewski.

That’s cer­tainly not what Barack Obama promised when he said his plan would make health care “bet­ter for ev­ery­body.” It’s not what he promised when he said the Af­ford­able Care Act would “cut the aver­age fam­ily’s pre­mium by about $2,500 per year.” It’s not what he promised when he said Oba­macare would “bend the cost curve” of health care.

What hap­pens now? Af­ter Democrats fin­ish crow­ing about what a suc­cess Oba­macare is, it’s likely they will ar­gue that sub­si­dies must be ex­tended to more and more Amer­i­cans to pay for cov­er­age that Oba­macare has made more and more ex­pen­sive. Repub­li­cans will re­sist, but at the same time re­al­ize Oba­macare has changed the health care sys­tem in ways that will be dif­fi­cult to over­turn and hard to fix.

And for those mil­lions for whom Oba­macare is a bad deal? They’re just out of luck.

( By­ron York is chief po­lit­i­cal cor­re­spon­dent for The Wash­ing­ton Ex­am­iner.)

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