Peak Obamacare? We’re Almost There

money-burdenThe administration has released a report estimating that enrolment in Obamacare will reach only 9.4 million to 11.4 million at the end of 2016. Back in 2010, when the law was passed, the Congressional Budget Office estimated exchange coverage would be 21 million next year (Table 4).

Why the come down? Obamacare has a miserable take-up rate: Few who do not get significant subsidies sign up. Even worse, many of those who sign up at open enrolment cannot afford the premiums and drop out. Indeed, 15 percent of Obamacare beneficiaries who signed in 2015’s open season (which ended in February) were gone by the end of June. (The New York Times has just published interviews with some struggling to pay their premiums and maintain coverage.)

One year ago, I coined the term “Peak Obamacare” to describe this phenomenon. Although the administration’s cheerleaders have twice celebrated very high Obamacare enrolment during open season, the administration has finally decided to accept reality: We are on the verge of Peak Obamacare.

Vindication for Obamacare’s critics? Well, not yet, I am afraid. The failure of the exchanges does not necessarily create enough pressure to repeal and replace the “law”. Obamacare exchange beneficiaries are not a politically powerful constituency. They currently amount to only about ten million people, scattered around the country; and given their age and household incomes I would bet they do not have a high propensity to vote.

Also, much of the criticism against Obamacare was that it would crush employer-based benefits. That 2010 CBO analysis figured a small reduction of three million covered by employer-based plans in 2016, versus a future without Obamacare. However, it looks like employer-based coverage is holding up much better than most had anticipated (although there is inconsistent evidence).

Comments (1)

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  1. Bob Hertz says:

    The New York Times article featured a woman whose subsidized coverage cost her $58 a month, but due to other pressing bills she let it lapse.
    I have sold health insurance, and that happens a lot in the individual market. Employer coverage rarely lapses because a bookkeeper is paying the group bill, Medicaid never lapses because it is free, and Medicare Part B rarely lapses because for most people the premium comes out of their Social Security check.
    Even Canada has some $50 monthly charges for coverage in some provinces,, but I have read that if someone does not pay that bill they get medical care anyways.

    You raise a good point about the ACA beneficiaries being non-voters. It makes for a fascinating question whether a Republican candidate for President could run on repeal of the ACA and get away with it.