The Real Story on How Much Obamacare Increased Coverage

Edmund Haislmaier / Drew Gonshorowski / October 22, 2014

We now have the Medicaid and private-market health insurance enrollment data for the second quarter of 2014 needed to complete the picture of how Obamacare’s rollout affected coverage.

What we’ve learned is that the Obamacare gains in coverage were largely a result of the Medicaid expansion and that most of the gain in private coverage through the government exchanges was offset by a decline in employer-based coverage. In other words, it is likely that most of the people who got coverage through the exchanges were already insured.

>>> Obamacare’s Effects on Health Insurance, Explained in One Infographic

The second quarter data captures enrollments that occurred during the last two months of the open enrollment period, or which were otherwise delayed due to the numerous problems experienced by the exchanges, and so did not take effect until after the end of the first quarter.

Our analysis of the data is reported in more detail in our latest paper, but our key findings are that in the first half of 2014:

• Enrollment in individual-market plans (both on and off the exchanges) increased by 6,254,564 individuals.

• Enrollment in private employer-sponsored group plans declined by 3,788,978 individuals.

• In the states implementing the Obamacare Medicaid expansion, enrollment in Medicaid grew by 5,716,977 individuals.

• In the states not implementing the Obamacare Medicaid expansion, enrollment in Medicaid grew by 355,674 individuals.

Applying a little arithmetic to those four key data points yields the following observations:

1. The drop in employment-based coverage offset 61 percent of the gains in individual-market coverage, for a net increase in private-sector coverage of 2,465,586 individuals.
2. Total Medicaid enrollment increased by 6,072,651 individuals, with 94 percent of that growth occurring in the states that adopted the Obamacare Medicaid expansion.
3. The total, net increase in health insurance coverage (private-market and Medicaid combined) during the first half of 2014 was 8,538,237 individuals, but 71 percent of that coverage gain was attributable to Obamacare expanding Medicaid to able-bodied, working-age adults

When it comes to covering the uninsured, Obamacare so far is mainly a simple expansion of Medicaid.

Thus, while most of the attention this year focused on the new health insurance exchanges, the data indicate that a significant share of exchange enrollments were likely the result of a substitution effect—meaning that most of those who enrolled in new coverage through the exchanges already had coverage through an individual-market or employer-group plan.

Given that increased enrollment in Medicaid accounted for 71 percent of the net growth in health insurance coverage during the first half of 2014, the inescapable conclusion is that, at least when it comes to covering the uninsured, Obamacare so far is mainly a simple expansion of Medicaid.

The 2015 exchange open enrollment period is scheduled to start less than a month from now (on Nov. 15), while enrollment in state Medicaid programs occurs year round. When the resulting enrollment data for the next phase of Obamacare become available it will be interesting to learn:

• The share of 2015 exchange enrollments that represent new applicants, as opposed to reenrollments by individuals who obtained exchange coverage in 2014;

• Whether the number of Americans with individual market coverage continues to grow, and whether the number of those with private employer-group coverage continues to decline; and

• If expanding Medicaid to able-bodied, working-age adults continues to be the principal source of coverage growth under Obamacare.

Infographic by Kelsey Harris