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Forbes.com

 

Most Obamacare Enrollees Already Had Insurance

January 18, 2014

By Avik Roy

At the end of the day, for all of the rhetoric and promises about what Obamacare would achieve, the health law’s most ardent supporters have stuck to their guns because of one thing: coverage expansion. But new data suggests that Obamacare may fail even to achieve this goal. Instead of expanding coverage to those without it, Obamacare is replacing the pre-existing market for private insurance. Surveys from insurers and other industry players indicate that as few as 11 percent of those on Obamacare’s exchanges were previously uninsured. If these trends continue, the probability increases that Obamacare will eventually get repealed.

65-89% of Obamacare exchanges enrollees were previously insured

The latest reporting on this topic comes from Christopher Weaver and Anna Wilde Mathews of the Wall Street Journal. They cite several industry surveys on the coverage history of those signing up for insurance on the Obamacare exchanges. The first, from McKinsey & Co., indicates that "only 11 percent of consumers who bought new coverage under the law were previously uninsured." McKinsey surveyed 4,563 individuals "thought to be eligible for the health-law marketplaces," of which 389 had enrolled in exchange-based plans.

Of those that didn’t sign up for Obamacare-based coverage, 52 percent stated that "affordability" was their biggest complaint with the exchanges’ plan offerings. Only 30 percent cited "technical challenges in buying the plans."

HealthMarkets, a insurance holding company based in Texas, conducted its own survey based on the 7,500-or-so people that the company enrolled in exchange-based plans. Based on their survey, obtained by Wilde and Mathews, only 35 percent of enrollees were previously uninsured. 10 percent previously had employer-sponsored coverage, but were dropping into the exchanges either because the exchanges offered a better (i.e., taxpayer-subsidized) deal, or because their employer had stopped offering coverage.

15 percent previously had individually-purchased coverage, but their old plans had been rendered illegal by Obamacare and were canceled. The remaining 40 percent were people previously covered under the old individual market, a market that was substantially less expensive than the Obamacare exchanges.

Not growing the insured; ‘we’re just adding complexity’

Priority Health, a non-profit health insurer in Michigan, surveyed 1,000 "enrollees…in plans that comply with the law," and found that only a quarter were previously uninsured. Another 25 percent had previously enjoyed employer-sponsored coverage; the remaining 50 percent had been previously covered under individually-purchased plans.

Joan Budden, chief marketing officer at Priority Health, told Wilde and Mathews that Michigan’s health insurers had expected 400,000 uninsured Michiganders to enroll in exchange based plans during the initial enrollment year. According to the latest data from the Obama administration, as of December 28, only 75,511 had "selected a marketplace plan." Of those, only an unknown fraction had paid their first month’s premium, and therefore were actually enrolled in new health coverage.

"I don’t know if we’re growing the number of people with insurance," a Minnesota-based health insurer told Wilde and Mathews. "We’re just adding complexity."

If we assume that around one-third of exchange enrollees were previously uninsured, and that 90 percent of those who have "selected a marketplace plan" will eventually enroll in coverage, the Obamacare exchanges have thus far only expanded coverage to 660,000 people, far less than the 7 million projected by the Congressional Budget Office.

Obama administration also exaggerating Medicaid enrollments

The Journal report comes on the heels of new analyses indicating that the Obama administration is wildly exaggerating the number of people who have signed up for the law’s expansion of the Medicaid program for low-income Americans. The administration claims that more than 4 million Americans have signed up for Medicaid coverage under the law. But Sean Trende of RealClearPolitics figures that only 5 to 7.5 percent of those enrollees were due to Obamacare.

Trende went back and examined new Medicaid enrollments in the states that have expanded Medicaid under Obamacare, and those that have not. He found, for example, that of the 1.7 million people in November who were "determined eligible for Medicaid and CHIP by State Agencies" under Obamacare, the majority—55 percent—took place in states that haven’t expanded Medicaid. In other words, those enrollments were for people who were previously eligible for Medicaid under prior law.

That means that a good chunk of the Medicaid enrollments in expanding states were also for previously eligible people. Trende then went back and looked at previous trends for Medicaid enrollment, prior to Obamacare’s launch. It turns out that people are enrolling and disenrolling in Medicaid all the time. So if you subtract out the baseline of normal enrollment trends, "we have an actual estimate for Medicaid enrollment due directly to the ACA’s expansion of Medicaid: 190,000."

Glenn Kessler of the Washington Post, who had previously repeated the administration’s Medicaid enrollment claims, went back and reviewed Trende’s analysis. Kessler described the administration’s Medicaid enrollment claims as "ridiculous" and admonished reporters "to be very careful" about using them. To his credit, he gave Three Pinocchios to everyone—including himself—who had "improperly used [the administration’s figure] or left the wrong impression about it."

If the Medicaid enrollment figures are far worse than they look, this is bad news for the big players in the Medicaid managed-care market, companies like Centene, Molina, WellCare, Humana, and WellPoint. In 2012, WellPoint paid top dollar for Medicaid-focused AmeriGroup, based on the premise that Medicaid enrollment would grow substantially under Obamacare.

Increasing the likelihood of repeal

I, along with most observers, have viewed as doubtful the likelihood that Obamacare ever gets repealed. Even if Republicans manage to regain the White House and the Senate by 2017, there will be tens of millions of people on Obamacare-based coverage by then. Prior to the website fiasco of October, the Congressional Budget Office projected that 34 million Americans would be enrolled in either the exchanges or the Medicaid expansion in 2017. It would be politically impossible to disrupt the coverage of 34 million people.

But what if the number is far less than 34 million? What if it’s only 5 million? Such an epic fail would seem far-fetched, but then again, so did the dismal performance of Obamacare to date. For 2014, the CBO has projected that 14 million previously uninsured Americans would gain coverage under the law. With about ten weeks left in this year’s enrollment period, we’re looking at a coverage expansion of less than a million.

Remember also that as many as 100 million previously insured Americans will endure higher premiums—and higher taxes—under Obamacare. The political constituency of the newly insured could be dwarfed by the political constituency of those harmed by the law. If that turns out to be the case, President Obama’s signature legislation may not be long for this world.

Original Source: http://www.forbes.com/sites/theapothecary/2014/01/18/coverage-expansion-fail-less-than-one-third-of-obamacare-exchange-enrollees-were-previously-uninsured/

 

 
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