Obamacare Koan: What Is A Health Insurance Market Where No Insurance Is Offered?

Obamacare-protest-AP(A version of this Health Alert was published by Investors Business Daily.)

Obamacare appears to be in a death spiral, with a shrinking pool of insurers offering coverage, far fewer individuals purchasing insurance than advocates had anticipated, and double-digit price increases making policies unaffordable — not only to many individuals and families, but to taxpayers, who are required to underwrite the hefty subsidies Washington promised.

The law is not working and its condition is getting worse. The centerpiece of the program, the health insurance exchanges (misleadingly labeled “Marketplaces” by the administration), will pretty much cease to exist within a few more years.

Despite media enthusiasm, Obamacare has not significantly increased the number of insured in America. According to the National Health Interview Survey conducted by the Centers for Disease Control and Prevention, about 70% of U.S. residents, age 18 through 64, had “health insurance” in 2015, the second year of ObamaCare enrollments. This was approximately the same percentage that had health insurance in 2006, before the Great Recession swept away jobs and health benefits.

What Obamacare has done is shift millions of Americans from the medical benefits they previously earned on the job to medical benefits they now receive through government welfare programs, primarily Medicaid.

This is not all President Obama’s doing: The shift began earlier, in 1997, when the Republican-majority Congress collaborated with the Clinton administration to expand Medicaid with the addition of the State Children’s Health Insurance Program (CHIP).

Obamacare put Medicaid expansion on steroids. And we are now seeing the results. The Congressional Budget Office estimated in February 2013 that the number of people on Medicaid would be 45 million this year. In March of this year, CBO increased its estimate by more than half, to 68 million people. At the same time, CBO’s estimate of the number of people who would purchase private insurance through Obamacare exchanges was revised downward from 24 million to 12 million.

The exchanges, of course, were supposed to be “Marketplaces” where individuals would shop and compare prices of policies offered by many competing insurers, like they shop on Expedia or Amazon. They are anything but. According to research recently published by Avalere Health, one third of our country’s insurance “rating regions” will have just one insurer offering policies on the Obamacare exchanges next year; more than half will have no more than two insurers. Pinal County, Ariz., was going to have no insurers offering policies (although one insurer has decided to step in at very high rates, after some political bullying).

Obamacare is becoming a Zen philosophical riddle: What is a health insurance market where no health insurance is offered?

This lack of consumer choice is intensified by double-digit premium hikes, which even the administration no longer bothers to deny. That’s one of the main reasons the exchanges have only half the subscribers previously anticipated: the cost, even with the subsidies.

Nevertheless, the Congressional Budget Office still believes Obamacare will somehow right itself. Of the 12 million individuals currently covered in exchanges, CBO figures 10 million receive tax credits and two million pay their own way without government assistance. CBO estimates those numbers will increase to 15 million and four million in five years, resulting in exchange policies covering 19 million people in 2021.

There is simply no pathway to that outcome.

Obamacare gave insurers special subsidies (called “reinsurance” and “risk corridors”) worth tens of billions of dollars to finance their losses in the exchanges for the first three operating years. Those subsidies end this year.

The number of people purchasing insurance on the Obamacare exchanges has hit its high-water mark. Premium hikes will continue — next year, the year after — and enrollment will decline.

The tragedy is that American health care needs nothing more than a well-functioning, competitive, transparent market for individual health insurance.

The bitterness caused by the 2010 Affordable Care Act, and the administration’s unwillingness to admit that Obamacare needs a serious overhaul, has resulted in an environment in which real change appears highly unlikely.

Regardless of who wins the presidency in November, the Obamacare experience has set back health real reform for years.

Comments (35)

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  1. Ron Greiner says:

    The medical mafia is in total control of all of the government. The GAO reports:

    –Our undercover testing for the 2016 coverage year found that the eligibility determination and enrollment processes of the federal and state marketplaces we reviewed remain vulnerable to fraud, as we previously reported for the 2014 and 2015 coverage years. [[For each of our 15 fictitious applications, the marketplaces approved coverage.]]

    For each of our 15 fictitious applications, the federal or state-based marketplaces approved coverage at time of application—specifically, 14 applications for qualified health plans, and 1 application for [[Medicaid]]. Each of the 14 applications for qualified health plans was also approved for APTC subsidies.–

    Of the 15 fictitious applications submitted by the GAO, all 15 were initially approved for coverage and subsidies.

    Government gone wild!

    GAO FRAUD SCORE – 100%

  2. Bob Hertz says:

    Good article as always, but I want to lodge a small protest against the assertion that “millions of persons lost insurance they once got on the job and now have coverage through government programs, mainly Medicaid.”

    My agency does a large volume in both employer group insurance and ACA exchange business. We see almost no groups who ever covered employees that earn less than 138% of poverty (the new Medicaid standard in the 31 expanding states). Once in a while a school district covers the lunch line servers, or a nursing home covers the nurses aides. But even these people usually make more than 138% of poverty.

    My intent here is not to praise Medicaid, but just to assert that the new Medicaid enrollees were not torn away from a sweet employer deal, which your paragraph seems to imply.

    • Ron Greiner says:

      Have you noticed how over-the-top ridiculous the Bob Hertz propaganda is getting during this (s)election cycle? Of course you have. So why is Bob Hertz pushing this in our face? Is there an agenda at play here?

      Bob Hertz sells over-priced employer-based health insurance to uninformed employers and employees for $20,000 a year or more for family coverage. Then when an employee gets ovarian cancer and can’t work Bob’s required 30-hours-per-week, they are switched to the Marketplace and taxpaers at the end of the month and Bob Hertz laughs all the way to the bank.

      Bob sells by screaming, “You have to buy my insurance or the IRS will get you!”

      Before Obamacare Bob Hertz had to pay the medical bills for 18 months on COBRA but now Bob drops them at the end of the month, what a scam.

    • The statement you have in quotation marks is not in the article.

  3. Devon Herrick says:

    An article today in The Hill, “Dems fear they made a mistake passing ObamaCare provision,” claimed Republicans sabotaged the ACA with Cromnibus 2014 legislation that required Risk Corridors to be budget neutral. However, I suspect the exchanges would have collapsed on their own regardless. It just would have taken longer.

    • Ron Greiner says:

      Another one bites the dust. Obamacare is making huge progress of sorts. Of the original 23 co-op sponsors the score is 17 down and only 6 to go. The New Jersey co-op is the 17th Obamacare co-op to collapse! The co-op was initially awarded $107.2 million in taxpayer-funded loans in 2012.

      Over 50% of all American counties have 2 or fewer health insurance companies on their so-called Marketplace. The role of government in America is to eliminate all competition for those that own the politicians.

      Proud to be an American slave. We don’t need no stinking freedom.

    • Bart I says:

      However, I suspect the exchanges would have collapsed on their own regardless. It just would have taken longer.

      And taken more down with them.

  4. Bob Hertz says:

    Ron, your hatred of employer coverage seems to cloud what you say.

    First of all, an ACA individual PP0 platinum plan for a family is getting to cost at least $1500 a month in most markets, which is $18,000 a year. The coming price increases will push some plans over $20,000 a year.

    These plans are most comparable to the employer plans that you say are so overpriced.

    These prices are caused by guaranteed issue, not by some employer black magic.


    if a person gets cancer and so is laid off work, they have the right to pay COBRA premiums. Neither I nor the employer can prevent them from getting COBRA. I really lost you on this last complaint.

    • Ron Greiner says:

      Bob, I will go slow for you. When a poor young woman has your over-priced employer-based health insurance and gets ovarian cancer and can no longer work she has a choice:

      1) Pay $1,650 a month for your COBRA and you will have to pay for her medical expenses.


      2) Switch to the Marketplace and have taxpayers pay a large percentage of the premium and then your employer-based company is done paying for expenses.

      Don’t play dumb Bob because you know all of the rules about Special Enrollment Periods (SEP) exactly like me.

      Employer-based health insurance bribed the politicians to pass Obamacare so sick expensive workers are transferred to those on Individual Medical (IM) on the Marketplace and the American taxpayer is left paying the bill. Come on Bob – this is a scam on the taxpayer, admit it.

  5. Lee Benham says:

    This is the problem with Employer based Benefits

    What are the largest U.S. tax expenditures for 2016?

    1. Exclusion of employer contribution for medical insurance premiums and medical care $216.1 Billion

    5. Defined contribution employer plans $73.9 billion

    11. Defined Benefit Employer Plans $46.3 Billion

    Tax payers are subsidizing $336.3 Billion of employee benefits.

    There is no such thing as a free market in health care. This is the problem and until it is addressed we will continue to have run away health care inflation.

    • John Fembup says:

      Lee, the Tax Policy Center confirms the numbers you cited:


      You go on to cite the existence of tax expenditures (deductions, exemptions, etc) as proof that there is no such thing as a free market in health care. Do you also believe the presence of tax expenditures (deductions) for home mortgage interest means there is no free market in housing? I suppose that could be exactly what you mean, if you are saying a free market must be absolutely free of any government presence or influence; that seems to me unrealistic.

      Back to the tax expenditure data, here’s something I don’t understand. The 2016 tax tax expenditures for employer-sponsored benefits would amount to well over $3 trillion in ten years. That amount of government expenditures does not include government spending on Medicare and Medicaid – or any individual Obamacare insurance subsidies. Yet that $3+ trillion is triple the $1.1 trillion America was told in 2012 Obamacare would cost over its first ten years. Why is that?

      “CBO and JCT now estimate that the insurance coverage provisions of the ACA will have a net cost of just under $1.1 trillion over the 2012–2021 period”


      What will Obamacare really cost the taxpayers over the next ten years? $1.1 trillion? Or more than $3 trillion PLUS whatever cost Obamacare added? And what, if anything, do the answers to these questions imply about the probable real cost of single-payer insurance?

      • Ron Greiner says:

        How much would the cost go up if the Socialists create single payer?

        “It is safe to say that if the Communists took over the Sahara Desert tomorrow, two things would happen. First, nothing. And second, with their centralized approach to the market, there would be a shortage of sand.”

        Government is not the answer – government is the problem.

      • Lee Benham says:

        what I am talking about is a Free Market in Insurance. Health Insurance is the only insurance that enjoys subsidies. You do not deduct home owners insurance or auto insurance. Employers are not paying home or auto insurance on behalf of there employees and Tax deducting the premiums. If they were we would have outrageous premiums for those products as well. The Gov would mandate oil changes and tire rotations are mandatory every 2500 miles.

        As far as what Obamacare and all of this will cost. I am confident it will be more. I love how the CBO is always cited by experts. However I have never read a CBO projection that 10 years later wasn’t double or triple there estimates.

        Can you site even one example of anything the CBO has ever projected that was accurate?

        granted it is not usually there fault the politicians change things every year.

        I feel you are trying to compare Apples and Oranges.

        • John Fembup says:

          “Health Insurance is the only insurance that enjoys subsidies”

          But insurance is not the only economic good that enjoys subsidies. Are you suggesting all tax deductions be eliminated?

          If not, what makes insurance different from, say, home mortgage interest? Or depreciation allowances, or any of the multitude of business expenses for which the government currently allows a tax deduction?

          • Lee Benham says:


            Great question.
            No I am not saying all tax deductions should be eliminated.

            The NCPA has been saying for years that we need a free market in health care in order to control costs. They then propose using tax credits within that free market. All I have been saying is if the market is subsidized it will not be a free market.

            “what makes insurance different from, say, home mortgage interest? Or depreciation allowances, or any of the multitude of business expenses for which the government currently allows a tax deduction?”

            I would say the main difference is Employee benefits are not a necessary expense for any company to operate. If it were every company would have employee benefits.
            They are a fringe benefit to employees they should not be considered a Business expense.

            • NCPA thinks capping the exclusion would be better than the status quo, but not as good as universal tax credit.

              A “free market” would have zero Medicaid, zero CHIP, zero Medicare, etc. Let’s stick to policy proposals that are aggressive, but achievable.

              • Lee Benham says:

                Then why is the NCPA talking about free market proposals to control the costs of health care?

                shouldn’t you just say a more fair subsidized health care market? Because we cant have an actual free market so we will continue to subsidies the market which will do nothing to slow the inflation of health care.

              • Lee Benham says:

                Doing the right thing is always achievable. Intelligent people will make intelligent decisions if given all the information. How about a revolutionary concept like just tell people the truth.

                Employee this is what you are getting and this is what you are paying for it. Should we continue doing this or should we make a change?

  6. Bob Hertz says:

    OK Ron, I see your point but I question the assertion that ’employer-based health insurance bribed the politicians to pass Obamacare.’

    Not that employers are paragons of virtue.

    But I question whether the number of laid off sick people who took COBRA before 2009 was really large enough for employers to get all worked up about.

    There was a period after the 2008 recession when COBRA was subsidized for laid off workers. Otherwise the take up rates were always very low.

    I would agree that getting relief from COBRA was a factor in getting employers to accept Obamacare. But I saw no evidence that employers ever got together, even in secret, to create Obamacare so as to relieve a tiny item on their health plan balance sheet.

    • Ron Greiner says:

      Bob, trust me, these employer-based insurance companies know exactly what they are doing, stealing from the American taxpayers. You are wrong when you say that heart attacks, strokes and cancers are an itty-bitty “TINY ITEM” on their balance sheets, you’re a hoot!

      Your propaganda is pathetic. Sure Obama and the Democrats gave employer-based insurance companies billions and billions by having the taxpayers pay for over-priced COBRA when the vast majority were not sick. The insurance companies love those people. All laws that were passed helped the employer-based insurance companies, that is what Democrats do. That is where the bribes are. To hell with the American people and their freedom of choice. That law didn’t help the Individual health insurance companies did it? It should have been a voucher that the worker could pay for their COBRA or get low-cost HSA Individual Medical (IM) and the savings could be kept tax free.

      Devon should have told you that.

      You can tell by Hillary’s figure that she is not exercising properly. No wonder Hillary is so sick. All she needs is a little discipline.

  7. Big Truck Joe says:

    A whistleblower working for one of these Obamacare exhcanges should do an audit of the fraud and submit to the HHS OIG to show how the exchange has swindled the govt by allowing fraudulent enrollees to seek and receive coverage. Fraud and abuse, baby, fraud and abuse.

  8. Bob Hertz says:

    I cannot find the exact number right now, but I believe that total employer spending on group health insurance is in the neighborhood of $800 billion a year. (It was $562 billion in 2012.)

    Here is an article which says that Obamacare might save employers $10 billion a year on their COBRA costs.

    So I stand by my earlier point. $10 billion is tiny in an $800 billion environment. $10 billion is not enough to bribe Congress with either.

    • Ron Greiner says:

      Bob, you know that Obamacare’s COBRA corruption is just the tip-of-the-iceberg of Obamacare’s total corruption.

      Another piece of Obamacare’s corruption was to outlaw child only policies in the Individual market forcing parents to pay 10 times more to their employer and all of the money goes to employer-based insurance companies and your commissions. YOU are heartless and selfish. YOU are stealing from single parent mothers.

      Another piece of Obamacare’s corruption eliminates Individual health insurance as an alternative for employees when their Open Enrollment at work-site is in the months of February – October.

      This is just 3 examples of corruption against the American people and the list goes on and on.

      I never said that scamming the taxpayer on COBRA was the only reason you and employer-based insurance companies bribed the Democratic congress to control the health insurance market. Like I said – your propaganda is pathetic.

  9. Bob Hertz says:

    Let’s talk about the elimination of child-only insurance, plus the coming restrictions on short term insurance.

    I am also opposed to these steps. But in my opinion they have NOTHING to do with a plot by big group insurance companies.

    These bad things were initiated by the ACA bureaucrats to force more and more people into the exchanges. The exchanges need healthy lives to survive and they may not make it.

    The ACA can do plenty of mischief on its own without needing conspiracies by big insurers.

    • Ron Greiner says:

      Bob, you know something about medical underwriting. Hillary Clinton suffered her first blood clot in 1998 while she was First Lady and experienced the second incident in 2009. This is called chronic.

      What in the world is wrong with Hillary Clinton? Besides her criminal activities and her warmongering, socialist, gun-grabbing politics, I mean. She collapses; has fainting spells; refuses to do press conferences; bobbles her head back and forth like a plastic, well, bobblehead; goes into weird, wide-eyed, out-of-control facial contortions; has constant coughing fits, and is escorted by physicians everywhere she goes. What gives?

      Hillary would be a big decline trying to purchase medically underwritten health insurance but we should let her be Commander-In-Chief?

      Without Hillary Obamacare is gone sooner rather than later.

    • Articles are appearing in the establishment health policy journals advocating there should be no individual market allowed outside the exchanges, like in DC.

  10. Ron Greiner says:

    In 2012, Hillary was given blood thinners for a venous thrombosis of her right transverse sinus, which drains blood from the brain. This occurred some two weeks after falling and suffering a concussion. (By her own admission, Hillary could not remember security briefings, etc., regarding her email leaks. She attributed this memory loss to her concussion.) Her venous thrombosis was found on a CT brain scan. Typical symptoms of a venous thrombosis of the transverse sinus include headaches, strokes, and seizures. (Several reports have noted Hilary has suffered from blinding headaches for years, which tends to explain her often wearing dark glasses.)

    *She has been diagnosed with hypothyroidism.

    *She broke her elbow from a fall.

    *She collapsed when she left a 9/11 ceremony this past Sunday. Her office said she has pneumonia.

    A diagnosis of venous thrombosis of her right transverse sinus might help explain the blackouts, severe head-bobbling, wild-eyed facial contortions, coughing spells, etc. On the other hand, if she has completely recovered from the 2012 diagnosis (about 57% of such patients do), her current symptoms stem from something else altogether.

    I’ve heard some physicians speculate that Hillary might also be suffering from Parkinson’s Disease. Medications prescribed for Parkinson’s Disease could also cause some of the symptoms we are seeing with Hillary.

    The BIG question is: Are Hillary’s health problems serious enough to disqualify her from being President of the United States?

    And I suppose the next biggest question is: If her health problems ARE serious enough to disqualify her from holding the office of President, would anyone bother to tell the American people?

  11. […] Fellow John R. Graham writes at the NCPA’s Health Blog.  A version of this Health Alert was published by Investors Business […]

  12. Steve Swank MD says:

    “the Obamacare experience has set back health real reform for years…”
    What exactly had been happening that was better?
    Seemed like it was pretty much stalled since Nixon’s price controls in 1976.

  13. Bob Hertz says:

    I am on the front lines of the death spiral here in MN, with 55% average increases. All the insurers were ready to leave the market in June, but the insurance commissioner begged them to stay and gave them extra large premium hikes.

    Minnesota has one of the nation’s largest high risk pools before the ACA. I was a policyholder due to a heart condition.

    The people who used to be in this pool have of course been “mainstreamed” into the general insurance population. According to an actuary I spoke to, these people are a huge problem for MN carriers.

    (reminds me of what happens in some school classrooms. A severely disturbed and needy child is “mainstreamed” in regular classes, resulting in a crummy experience for all the other students.)

    Anyways, Look at the raw numbers. If you as an insurer have just 10 people making claims of $100,000 each, you need well over 300 healthy people paying a $3000 annual premium just to avoid losing money.

    But the average age of applicants on the MN exchanges is over 45. Not too promising.

    What is to be done?

    Personally I would like to look at absorbing high risk persons into Medicare. That is what we did with dialysis patients and the disabled. We would take these people out of the normal risk pool and fund them with federal dollars.

    Another option (which some Republicans endorse) is to let the insurers go back to full underwriting, but then rebuild the high risk pools.

    We had better build the pools with federal dollars. Leaving this to the states will drag us back into the same morass as before.

    One note, though……one of the Republican proposals was to spend $25 billion over 10 years on high risk pools. The real cost would be at least $25 billion every year. Anything less reminds me of what Michael Corleone said to Carlo at the end of Godfather I:

    “Don’t tell me you’re innocent, because it insults my intelligence.”