Obamacare's insurance marketplaces are doing a brisk business. According to federal data released last month, a record 21.3 million Americans signed up for an exchange plan during the 2024 open enrollment season. Nearly 5 million were new customers.
"Numbers do not lie," said Chiquita Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services in response to the news. "[D]emand for Marketplace insurance coverage [is] at an all-time high ..."
The story behind those numbers is less impressive. If previous years are any indication, the surge in sign-ups is largely because the government is picking up the tab.
Paying people to sign up for coverage they wouldn't buy on their own is no achievement. But that's exactly what the Biden administration is shouting from the rooftops about.
Obamacare's exchanges were intended to bring together millions of people in search of affordable health coverage and insurers looking to reach them. This approach had the potential to boost competition among insurers for consumers' dollars — and lead to lower prices and deductibles, more providers and better insurance quality.
But Obamacare's onerous mandates and regulations got in the way of those plans.
The law imposed a range of restrictions on what insurers can charge and what benefits they have to cover. It also required them to sell to all comers, regardless of health status or history.
In so doing, Obamacare guaranteed insurers would have to raise premiums, since their more conventional strategies for controlling costs were now against the law. Many did exactly that.
Whereas the average individual premium was just $244 a month in 2013 — the year before the marketplaces opened — by 2019 rates had more than doubled to $558. In 2023, average monthly premiums surpassed $600.
The administration is no longer pretending that the exchanges are supposed to function as a competitive market. The new metric of success is enrollment volume. And Democrats have gone about boosting sign-up numbers by lavishing taxpayer money upon consumers.
The enhanced premium subsidies passed as part of the American Rescue Plan Act — and which Congress extended through 2025 as part of the Inflation Reduction Act — cap the amount any American must pay for coverage at 8.5% of income. People who make less than 400% of the poverty level — roughly $124,000 for a family of four in 2024 — qualify for more generous taxpayer-funded assistance.
For people earning up to 150% of the poverty level — $46,800 for a family of four, according to the 2024 guidelines — the new subsidies make coverage effectively free.
It's this last group — people who can now get premium-free coverage — that accounts for the recent upticks in enrollment. Between 2022 and 2023, sign-ups among Americans earning between 100% and 150% of the poverty level soared, according to analysis from the Paragon Health Institute. Enrollment for all other income groups dipped.
There's little reason to believe these trends have fallen off in 2024.
One conclusion to draw from these numbers is that, unless it costs them nothing, Americans aren't interested in buying what the exchanges are selling. Even among patients who qualify for marketplace subsidies, 4.4 million chose to remain uninsured in 2023, according to a recent report from the Congressional Budget Office.
But the bigger story is that the Biden administration has taken what was supposed to be a competitive market for coverage and transformed it into a public-assistance program for low-income Americans.
This transformation has required staggering sums of taxpayer money to execute. If left in place, premium subsidies for exchange plans are expected to cost $1.1 trillion between 2024 and 2033.
The Biden administration is now embracing the exchanges as purveyors of public assistance.
"For decades, when it came to federal programs we could depend on to keep Americans covered, three were always top of mind — Medicare, Medicaid, and Social Security," said Xavier Becerra, Secretary of the U.S. Department of Health and Human Services. "[B]ut now it's crystal clear that we need to add a fourth — the Affordable Care Act."
Most Americans aren't looking for another taxpayer-funded welfare program. They want an insurance market that offers coverage worth buying at a price they can afford.
That shouldn't be a tall order. Yet it's one the Biden administration has failed to deliver.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
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