Thursday, June 25, 2015

The King V. Burwell Decision

First, as any of us who know the market can appreciate, the Court just saved the Republicans from themselves. They were in no way ready to avoid the crisis that would have engulfed the individual market––half of those people on the exchange who would have lost their subsidies and the other half off-exchange that would have seen 30% to 50% rate increases––on top of the big increases already announced––without a quick fix.

Does this mean that Obamacare has cleared its last major hurdle?

Not a chance.

Obamacare has only enrolled about 40% of the subsidy eligible market in two years worth of open enrollments. That level of consumer support does not make Obamacare either financially sustainable or politically sustainable. The surveys say the 40% who have enrolled like their plans. Of course they do, they are the poorest with the biggest subsidies and the lowest deductibles. The working and middle-class have most often not signed up for Obamacare because it costs too much and delivers too little.

That Obamacare is not financially sustainable is evidenced by the first wave of big 2016 rate increases by so many large market share insurers. The next wave of rate increases a year from now will also be large and will be in the middle of the 2016 election.

These rate increases will further undermine the political sustainability of the law that has been reflected in five years of polling.

The attempt to scuttle the law through the Supreme Court was ill conceived and Republicans are very lucky it did not happen.

Now Obamacare has to stand on its own going into the 2016 elections and the growing evidence is that won't be any easier.
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