Weren’t Obamacare’s kinks supposed to be worked out by now?

From the beginning, I was skeptical of the Patient Protection and Affordable Care Act, popularly known as Obamacare, for legal, political, and policy reasons. It turns out, we could have used a lot more skepticism back in 2009 and 2010.

On the political side, Obamacare failed to attract Republican support, not least because President Obama wasn’t really trying to get GOP votes. Important legislation, especially when it targets 1/5 of the American economy, works best when there is at least somewhat broad consensus and bipartisan support. Obamacare never had it.

Instead it was jammed through on a late night, partisan vote. After Republicans won a special Senate election in Massachusetts, Democrats couldn’t even amend the bill lest it be sent back to the Senate and face a filibuster. They just accepted their half-baked half-a-loaf and moved on.

On the legal front, the Supreme Court ultimately decided that the individual mandate, which I and many other state attorneys general challenged, was constitutional. Supporters of the law cheered the result but prefer to ignore how the court reached its conclusion: by saying that the mandate, which Democrats had insisted was not a tax, was in fact a tax.

Obamacare survived its legal and political difficulties. It’s on the policy front, on fundamental problems with the law’s underpinnings, that it continues to struggle. From the Wall Street Journal:

“The Affordable Care Act is now rolling into its fourth year, and even liberals are starting to concede that the insurance exchanges are in distress and Congress may have to reopen the law. Premiums are high and soaring; insurers have booked multimillion-dollar losses and are terminating plans; and the customer pool is smaller, older and less healthy than the official projections.

“The natural result is another round of rate shock for 2017. Insurers in 49 states have submitted their premium requests to regulators, and the average “enrollment-weighted” rate increase, which accounts for market share, is in the range of 18% to 23%. The Congressional Budget Office projected 8%.”

It’s becoming increasingly difficult for the law’s supporters to pretend that all is well. Consider:

  1. The enrollment projections Congress used in passing the law were off, wildly. About half as many people are buying insurance policies on the exchanges than was projected, 21 million vs. the reality of 11 million.
  2. Premiums are skyrocketing next year. The average rate increase that insurers are seeking, as the Journal noted, is 18-23%.
  3. Instead of leveling out, the market is in turmoil. The law’s supporters expected rates to steady by now as the kinks were worked out and insurers figured out their price points. Instead, rate increases are quickly rising rather than calming down.
  4. Premiums for plans on the exchanges are rising far faster than the cost of medical care. It’s further evidence that the exchanges remain attractive to less healthy customers but unappealing, for cost and other reasons, to healthier, younger customers who could help balance out the risk pools.
  5. For too many consumers, plans on the exchanges have been the worst of all worlds: higher premiums, higher deductibles, more limited networks and fewer choices. “If you like your plan, you can keep your plan” was proven to be a lie long ago. Hillary Clinton is proposing a tax credit of up to $5,000 per family to deal with out-of-pocket costs, itself an acknowledgement that these costs have grown for many even though more people have medical insurance.
  6. More insurers are rethinking their involvement in the exchanges. Aetna said this week that it may pare back its involvement in the exchanges from 15 states down to four. UnitedHealth and Humana previously made similar moves. All five of the largest insurers are losing money on exchange plans.

The law’s supporters were quick to call Aetna’s announcement mere blackmail over approval of its impending merger, but they’ve been quick to dismiss every pullback by insurers. Every time an insurer announces it is reducing its footprint in the exchanges or pulling out entirely, the administration has rushed to claim that everything is going just fine here. Nothing to see, move along folks.

Most Obamacare skeptics did not expect the program to just collapse. Massive new programs don’t thrive or fail immediately, and in Obamacare’s case, the subsidies to insurers to cover losses helped paper over the problems. The metrics now, though, point to a program that is slowing sinking under its own enormous weight.

At the very least, it’s clear that Obamacare is less successful at attracting customers than projected, more expensive than planned, and doing little to make health care more affordable. But that’s not really a surprise, is it?
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.