CBO's Obamacare Enrollment Numbers: Not Looking Good | Citizens Against Government Waste

CBO's Obamacare Enrollment Numbers: Not Looking Good

The WasteWatcher

There has not been much news coverage on a January 25, 2016 Congressional Budget Office’s (CBO) report: “Budget and Economic Outlook: 2016 to 2026.” The likely reason is the news about the Affordable Care Act is not good.  However, some health policy experts are not shy about telling us what is going on. Brian Blase of the Mercatus Institute wrote about the CBO report in his January 26 Forbes column:

… the Congressional Budget Office (CBO) substantially changed its short-term Affordable Care Act (ACA) estimates in ways that show the law is performing far worse than expected. CBO’s new projection of 13 million exchange enrollees in 2016 is nearly 40% below previous expectations. CBO also projects that the average subsidy per enrollee in 2016 will increase by about 18% relative to its March 2015 ACA estimate – an indication that enrollees are both less healthy and poorer than the agency originally projected.

Blase goes on to point out how many organizations, in addition to the CBO, had consistently overestimated the number and type of people that would enroll in ACA. It was believed healthy, young people with higher incomes would flock to ACA, not only to get "get covered" but to avoid paying the tax for not doing so. That has turned out not to be the case. The bottom line says Blase is “ACA plans are proving to be unattractive to relatively healthy people with income above 200% of the FPL. These plans generally have far higher premiums and deductibles than pre-ACA individual market plans.” (ACA provides subsidies to individuals with incomes between 200-400 percent of the federal poverty level, which is approximately $23,540 to $47,080 for an individual.) No doubt many have also made the calculation it is less expensive to pay the tax. Without enough healthy, young people participating in the ACA exchanges to counter the higher costs of older, sicker individuals, premiums will increase. Higher premiums discourage even more healthy people to stay away. Ultimately, this takes Obamacare into a death spiral and its eventual collapse. Blase also writes “ACA’s Medicaid expansion is costing far more than projected because of higher enrollment and higher spending per enrollee.” This is not good.  Medicaid already consumes, on average, about 24 percent of states’ budgets and expanding Medicaid will only make it worse. Plus, in addition to being a bureaucratic nightmare, it is a terrible healthcare delivery system. Many physicians refuse to see Medicaid patients because of its low reimbursement rates; they could not keep their practice open if they did. (You can read about problems with Medicaid in a January 30, 2014 Citizens Against Government Waste SwineLine blog.) Avik Roy, a senior fellow at the Manhattan Institute, also took a close look at the CBO numbers in his January 26 Forbes column. He notes that even into the future, CBO implies that it "expects exchange enrollment to peak at 16 million: a far cry from the 24 million it predicted last March." Roy also points out an interesting factoid that Senator Chuck Schumer (D-NY) mentioned in a November 2014 press conference when he lamented that Democrats should not have spent time reforming healthcare and instead, should have focused on the middle-class by bringing an end to the recession, better wages, and more jobs. After all, said Schumer, "only a third of the uninsured are registered to vote ... it made no political sense." Roy analyzed Schumer's factoid regarding registered voters and offers a new one to ponder. He writes:

The Obama administration often boasts … that 24 million people have been helped by Obamacare. But the government’s official estimates are that it’s under 9 million. Of which only a fraction can vote in the 2016 election. Compare that to the number of people whose plans have been canceled (6 million), or the number of people who’ve had their premiums or their taxes hiked (dozens of millions). And that’s why Obamacare remains gravely vulnerable to repeal.”

Both Blase's and Roy's analyses provide a good look at why ACA is in deep trouble.

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