The WasteWatcher: The Staff Blog of Citizens Against Government Waste

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The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Between the three-day holiday weekend and the big snow storm on the east coast, you may have missed this news story from the Jan 17, Wall Street Journal.  Titled  “Exchanges See Little Progress on the Uninsured” by Christopher Weaver and Anna Wilde Mathews it concerns a survey undertaken by McKinsey & Company of 4,463 consumers between November and January.  Of the amount surveyed, 389 had enrolled in a new insurance plan through an exchange but only 11 percent had been previously uninsured.

None of us who have been critical of the Affordable Care Act, better known as Obamacare, will be particularly surprised if the McKinsey and Company survey reflects what is happening nationwide with respect to purchasing an insurance policy through the exchanges.

The administration is touting the figure that nearly 2.2 million people have selected a health insurance policy between Oct. 1, 2013 and Dec. 28, 2013.  Keep in mind the administration claims it does not know who has or has not paid a premium for their first month of coverage.  As far as CAGW is concerned, unless a person has paid the premium, he or she is not insured.  Therefore, the 2.2 million figure does not really indicate how many people have coverage through Obamacare.

The Journal article further states, “early signals suggest the majority of the 2.2 million people who sought to enroll in private insurance through new marketplaces through Dec. 28 were previously covered elsewhere, raising questions about how swiftly this part of the health overhaul will be able to make a significant dent in the number of uninsured.”  According to the Journal, approximately two-thirds of the consumers to the exchanges already had insurance that they either had purchased prior to the implementation of Obamacare or through their employer.  Insurers say the number is falling short of what they expected and presents “a worrying trend for an industry looking to the law to expand the ranks of its customers.”

No kidding.  The insurers supported Obamacare because they expected new customers coming from the ranks of the often-cited 48 million uninsured; not people shifting from one insurance policy to another.

In addition, the Journal reports 52 percent of people who shopped for a plan in an exchange but did not purchase one did so because of the lack of affordability.  For 30 percent of the shoppers, another major reason for not purchasing a plan was the technical challenge they faced with the website.  Considering how bad Healthcare.gov has operated since its Oct. 1 2013 rollout, along with several state-based exchanges' websites, this is not surprising.

The Journal also gives statistics from other healthcare-related companies involved in Obamacare enrollment.  These statistics demonstrate a similar lack of progress of Obamacare attracting the uninsured and instead simply re-insuring others.  It appears many enrollees had health insurance but decided to go to the exchange because of the taxpayer-funded subsidies, or because their health insurance plans didn't meet the Obamacare expensive mandates and were cancelled, or because their employer dropped coverage.  Here are examples cited in the Journal:

  • Health Markets Inc., an insurance agency that enrolled approximately 7,500 people in exchange plans, said 65% of its enrollees had prior coverage.  Around 10% were dropping out of employer coverage, either because the employer stopped offering its plan or because they could qualify for subsidies on the marketplaces.  Fifteen percent had previous individual plans canceled and 40% decided to switch into coverage bought through an exchange from previous individual plans.
  • Joan Budden, the chief marketing officer at Michigan-based Priority Health reported that 25% of more than 1,000 enrollees they surveyed purchasing plans that comply with the law were previously uninsured, 25 percent had employer-supported plans, and 50 percent purchased their own coverage last year.  Of the latter group, half will be getting tax-payer funded subsidies through Obamacare.
  • Michigan insurers expected 400,000 of the state's 1.2 million uninsured people to join private plans this year.  At of the end of December, only 76,000 enrollees had done so and many were previously covered.

If the trend continues that most of the people who purchase insurance in the exchanges were previously insured, one could easily argue that Obamacare has failed in its task of  insuring the uninsured, particularly young, healthy adults that are needed to offset the costs due to the law’s expensive mandates.  Young adults, between the ages of 19 and 34 represent about 40 percent of the uninsured.

Many health insurance companies report in the Journal article they do not know at this time how many of the new enrollees in the exchanges previously had insurance.  The Department of Health and Human Services also says they do not have this statistic.

The Journal article points out that the healthcare reform law is reducing the uninsured in other ways.  For example, at least 4 million people are expected in enroll in Medicaid in the next few months.  However, CAGW has argued Medicaid is not very good health insurance because participants find getting access to doctors is limited and they often rely on expensive emergency room care.  Plus, studies have shown health outcomes are not good under Medicaid.  Medicaid represents an ever-growing portion of a state's budget, now averaging about 24 percent.

What will taxpayers do after the government has spent billions of dollars to remake one-sixth of the nation’s economy only to learn that most people participating in the Obamacare exchanges were previously insured and that the number of uninsured individuals remains high, while at the same time raising healthcare costs for millions of Americans?  That is a situation politicians better be prepared to deal with.

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