Wednesday, October 16, 2019

Obamacare is "Stable" at an Incredibly Unstable Place

The Democrats Want to Move Beyond Obamacare Because We Have No Other Choice

 

Before I start talking about the presidential candidates' health care plans, let's review just exactly where we are with the Affordable Care Act (Obamacare).
For the last few years I have made a number of points:
  • Before Obamacare, and in the individual health insurance market, the middle class healthy enough to qualify for coverage found a variety of affordable options.
  • The poor, before the Medicaid expansion in most states and relegated to the individual market, largely could not afford even these available policies. 
  • Then, Obamacare brought affordable health care for the poor both in the states that expanded Medicaid and through generous premium and deductible subsidies in the individual market––generally for those who made less than 250% of the federal poverty level.
  • The Medicaid expansion has added 12 million to the Medicaid rolls.
  • But for those in the individual market who did not qualify for subsidies (40% of that population)––and even many who did qualify for premium subsidies but still faced enormous deductibles (those making more than 250% of the federal poverty level), the choices were often unaffordable. What good is a premium of a few hundred dollars a month for a subsidy eligible family making $65,000 a year only to have to face a $7,000 per person deductible?
  • Given the unattractiveness of the Obamacare individual market policies, we never had more than 40% of the subsidy eligible sign-up for coverage (75% are needed for a balanced and efficient risk pool) leading to a very expensive policy premiums and a cycle of ever higher premiums driving out even more of the unsubsidized who could no longer afford the premiums and deductibles––family plans costing $15,000 to $20,000 a year with $7,000 individual deductibles were not uncommon. 
  • Insurance companies responded by dramatically raising the rates leaving them with only the most highly subsidized consumers insulated from these high premiums and deductibles by the federal subsidies (largely those making less than 250% of the federal poverty level). Simply, these highly subsidized people don't care what the policies cost since their costs are capped at a percentage of their income enabling insurers to charge premiums high enough to cover the cost of the very sick risk pool and still create record profits for themselves. The health insurance industry will pay out $800 million in consumer rebates this year because they exceeded maximum profit limits under the law.
  • The Medicaid expansion has also been good news for the insurance industry––two thirds of Medicaid beneficiaries (54 million people) are now enrolled in private Medicaid contracts with $300 billion in Medicaid money paid through health insurers. That is up from $60 billion ten years ago.
  • Simply, we went from a pre-Obamacare system that hurt the poor and the sick to a post-Obamacare system that works well for the poor and sick but has made things much worse for the middle-class––but is very very profitable for the insurance industry.
If you have been a long-term reader of this blog not one of these things will come as a surprise to you.

These trends have manifested themselves in the data. According to an August CMS report:
  • During two successive years of declining unsubsidized individual market enrollment from 2016 to 2018 (beginning before the Trump administration), enrollment declined by 2.5 million people––representing a 40% drop in unsubsidized consumers in the individual health insurance market. By itself, Iowa lost 91% of its unsubsidized market.
  • The most recent year (2017 to 2018) showed a drop of 7% of those covered in both the subsidized and unsubsidized individual health insurance market––with a drop of 4% in the subsidized market and a 24% drop in the unsubsidized market.
Many of the long-time Obamacare supporters now refer to this as a "stable" system. But how can anything that so negatively impacts the American middle-class be considered stable?

These failures led Democratic presidential candidates to first generally support moving beyond Obamacare to a single-payer Medicare for all sort of regime. Now, further into the campaign, most Democratic presidential candidates have focused on fixing Obamacare as a route toward an eventual universal plan. Only Sanders and Warren have stuck to the notion of Medicare for all.

On the Republican side, so far there has been no plan.

Next, I will post my analysis of the leading presidential candidates' proposals as well as a review of what Republicans proposed in 2017––and would appear to be inclined to stay close to for 2020.

Related Posts:

 

Joe Biden's Health Insurance Plan Would Fix the Individual Health Insurance System 

 

The Public Option's Silver Lining?

 

There is Now No More Support for a Medicare For All Single-Payer Health Care Than There Was in 1977, or 1993, or 2009

 

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