Obamacare is dramatically reshaping health care markets, especially the individual insurance market. The first results of the law’s standardization of coverage and imposition of new government benefit mandates and regulations were increased premiums—quite substantial in many cases—and the loss of existing coverage for several million Americans.
Obamacare’s longer-term consequences are still a topic of considerable debate among experts—in large part because it is hard to project what health insurance markets will look like if Obamacare remains in place. That’s because doing so requires making assumptions about how the law’s numerous provisions will interact over time. Even so, here are some recent predictions:
Higher costs, more uninsured. One recent projection, from Stephen Parente, a health economist at the University of Minnesota, and Michael Ramlet of American Action Forum, used the administration’s reported 2014 exchange and Medicaid enrollment figures to model the law’s impact on health plan prices and enrollment over the next decade. Though the experience will vary from state to state, the authors project national cost increases for the Obamacare silver plan of about 25 percent for individuals and families within five years. In addition, they project an increase in the uninsured by about a half-million within five years.
They anticipate enrollment will grow significantly in the individual market in 2015 and 2016 but will drop in 2017 when Obamacare’s reinsurance and risk corridor programs end. They expect the end of those programs will cause premiums to increase. And, although Obamacare offers subsidies, they estimate the resulting growth in the cost of insurance will outpace the value of the subsidy, producing a decrease in private insurance coverage in the individual market and an increase in the uninsured.
Heavily subsidized high-risk pool. Ed Haislmaier, a health insurance market expert at Heritage, has analyzed insurer participation and health plan enrollment in the exchanges and expects “Obamacare to devolve into a heavily subsidized, Medicaid-like pool of low-income individuals in poor health.”
Also looking at the administration’s reported enrollment data, Haislmaier finds it significant that 65 percent of all enrollees chose a silver plan and 95 percent of those silver plan enrollees qualify for subsidies. Though it cannot yet be determined how many of those enrollees qualify for Obamacare’s cost-sharing reduction subsidies—which are available only with silver plans—it is likely that many do, and as Haislmaier writes, “[I]t should be seen as a flashing warning light that the exchanges are headed for what looks a lot like a giant, heavily subsidized, high-risk pool.”
He says Obamacare’s exchanges look a lot like Medicaid. In fact one-fifth of the insurers offering exchange coverage have Medicaid managed care as their principal or exclusive line of business—and many exchange plans offer only narrow networks of doctors and hospitals to enrollees, a tactic used widely in Medicaid managed care today.
Indeed, as Haislmaier points out, the CEO of Molina, one of the larger Medicaid managed care companies, stated that, “Medicaid is essentially an individual market for low-income patients … and Medicaid has premiums that are paid for by the state. The reason we went after the exchange is we feel there are a lot of similarities.”
Haislmaier says “Obamacare is effectively designed to create heavily subsidized, Medicaid-like coverage for those who are in poor health and have incomes between 100 and 250 percent of the federal poverty line,” which qualifies them for the cost-sharing reduction subsides…What all this means is that Obamacare’s final destination is more a fiscal sinkhole than a market collapse. That is an ugly result, but it is a different kind of ugly result than what many currently expect or fear.”
$2 trillion spent, 31 million left uninsured. In contrast, the Congressional Budget Office’s latest report projects exchange enrollment to grow significantly over the coming years, reaching 25 million by 2017 and holding at that level through 2024. CBO also estimates that in 2024, there still will be 31 million uninsured individuals—even after spending almost $2 trillion over 10 years (2014-2024) to expand Medicaid and subsidize exchange coverage.
Under any of these scenarios for the future of Obamacare, health care costs and government spending will be higher, and America’s health care system still will be in need of real reform.