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Even Supporters Need To Realize That Obamacare Needs A Fundamental Fix

Fri, 03/14/2014 - 10:44am
Robert Laszewski

The administration has confirmed that the individual policies that were supposed to be cancelled because of Obamacare can now remain in force another two years.

For months I have been saying millions of individual health insurance policies will be cancelled by year-end — most deferred until December because of the carriers’ early renewal programs and because of President Obama’s request the policies be extended in the states that have allowed it.

The administration, even today, as well as supporters of the new health law, have long downplayed the number of these “junk policy” cancellations as being insignificant.

Apparently, these cancelled policies are good enough and their number large enough to make a difference come the November 2014 elections.

As a person whose policy is scheduled to be cancelled at year-end, I am happy to be able to keep my policy with a better network, lower deductibles, and at a rate 66 percent less than the best Obamacare compliant policy I could get — presuming my insurance company and state allow it.

But for the sake of Obamacare’s long-term sustainability, this is not a good decision.

The fundamental problem here is that the administration is just not signing up enough people to make anyone confident this program is sustainable.

Yes, the law’s $20 billion “3Rs” health insurance company reinsurance program will prop up the program through 2016 — and even be enhanced because of these changes. But then the “training wheels” come off and the program has to stand on its own. As I have said on this blog before, I don’t expect the insurance industry to be patient past 2015 before it has to begin charging the real cost of the program to consumers.

The administration now claims that it signed up 4 million people as of late February. Of course, that number is inflated. It has been widely reported; including here at the New York Times, that about 20 percent of the people who enrolled in January never paid their premium and were cancelled. Carriers are telling me that another 2 percent to 5 percent of those January enrollments never paid their second month’s premium.

So, that 4 million Obamacare enrollment number is likely more like 3 million.

The Kaiser Family Foundation has said that 17.2 million people are eligible both for the new health insurance exchanges and eligible for a subsidy. Because the direct enrollment function hasn’t been working, the only place a person can get a subsidized policy is on the exchanges.

In reporting their enrollments in February, the administration said that 82 percent of the exchange enrollments were getting a subsidy.

That means only about 2.5 million subsidy eligible people (82% of 3 million) have so far signed up and paid for their coverage out of a total of 17.2 million eligible — or about 15 percent of the total the Kaiser Family Foundation estimates are eligible.

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