Obamacare’s 5 year Anniversary & Second Open Season: Average Premium Up 23 Percent – After Subsidies

by John Graham,

With enrollment data through February 22, the administration finally declared Obamacare’s second enrollment season closed and released its report on the results. (Although, people who have to pay Obamacare’s mandate/penalty/fine/tax as a result of information disclosed in their 2014 tax returns will have a special open enrollment in April).

Obamacare’s supporters cheered that enrollment hit 11.7 million people, exceeding the low-ball estimate of 9.1 million the administration made last November. Lost in the enthusiasm for Obamacare’s new high-water mark are a few uncomfortable facts.

First, the average premium — net of subsidies — has jumped 23 percent from 2014. In both years, insurers covering almost nine in ten Obamacare subscribers received subsidies to reduce premiums.

Second, Obamacare continues to “churn” peoples’ insurance coverage. Like last year, we can expect a significant share of this year’s 11.7 million enrollees will never pay a premium, often because they will receive employer-based coverage if they move up in the world, or fall into Medicaid dependency if they drop.

over one fifth of those who were enrolled by April 2014 had vanished from Obamacare by February 2015. Maybe some of them did re-enroll for 2015.

Third, a loss for the administration in the Supreme Court’s King vs. Burwell lawsuit will deal a mortal blow to Obamacare. This is the lawsuit asserting what the Administration is paying out of subsidies to insurers in state-based exchanges is illegal.

Fourth, Obamacare subscribers are less satisfied with their plans than beneficiaries of other government or private health plans are:

The 29 percent of re-enrollees who switched plans is higher than that seen in other programs. For example, studies show approximately 13 percent of Medicare Part D enrollees change plans in a given year; 12 percent of those active employees with Federal Employee Health Benefit Plan coverage switch plans each year and only about 7.5 percent of those with employer sponsored coverage switch plans for reasons other than a job change during a given year. (p. 6)

Fifth, both the Obamacare subsidies and the Affordable Care Act’s big increase in Medicaid spending are higher than necessary to get people covered. Although the average net premium jumped 23 percent, subscribers were nevertheless willing to pay up for a higher level of coverage. While 77 percent of the 7.65 million subsidized subscribers who used healthcare.gov could have bought plans for less than $50, only 38 percent did. While 89 percent could have bought plans for less than $100, only 63 percent did (Table 7). Obamacare subscribers have enough discretionary income to pay for health insurance and need not be so dependent on taxpayers.

Despite a successful headline number of subscribers, Obamacare is still deeply flawed.

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