Open enrollment in Obamacare's exchanges begins next month. And as they mark more than a decade in business, the failure of these online insurance marketplaces is everywhere to see.
Exchange coverage is far more expensive than originally predicted. It's also proved difficult for beneficiaries to put to use.
In short, Democrats have engineered an insurance marketplace that serves the interests of neither taxpayers nor patients. And they've spent lavishly to keep it running.
That's the upshot of a new paper by Daniel Cruz and Greg Fann of the Paragon Institute. As they point out, the Congressional Budget Office originally projected that each new patient enrolled in exchange coverage would cost taxpayers just $10,538. The actual cost as of 2021 was an astounding $36,798.
A great deal of this excessive spending stems from subsidy increases passed under the Inflation Reduction Act. That law increased the value of subsidies available to Americans earning between 100% and 400% of the federal poverty level.
It also ensured that no American — no matter how wealthy — would ever pay more than 8.5% of his or her household income on exchange coverage. In 2022, the Congressional Budget Office estimated that these enhanced subsidies would cost $64 billion through 2025.
One would expect that health coverage so heavily subsidized by taxpayers would at least be a good deal for patients. But Obamacare's onerous rules and regulations have resulted in a drastic decrease in the quality of coverage on the individual market.
Consider that nearly three-quarters of exchange plans feature narrow provider networks, according to a recent report from the consulting firm Avalere Health. A separate study by the Government Accountability Office looked at 375 insurers across the country and found that 243 failed to meet network adequacy standards.
This means that many patients covered by an exchange plan often have trouble finding a physician that takes their coverage.
Exchange plans also tend to carry staggeringly high deductibles, which require patients to pay significant sums out of pocket before their insurance kicks in. The average per-person deductible for a mid-level silver marketplace plan was $4,753 last year. And in 2023, the average medical deductible for a less generous bronze exchange plan was $7,481.
Naturally, this combination of burdensome cost-sharing and narrow provider networks has left many Americans reluctant to shop on the exchanges. This helps explain one of Cruz and Fann's other major findings. In 2013, the CBO projected the individual coverage market would grow by 20 million people; by 2021, it had actually grown by just 3 million.
Obamacare's cheerleaders point out that the law has driven down the uninsured rate. That's true. But it's done so largely by enrolling them in public coverage through Medicaid. Of the 19 million Americans who have gained health coverage since Obamacare took effect, newly eligible Medicare recipients account for 17.4 million.
That's hardly an achievement. It would have been more straightforward — and cheaper — back in 2010 to just expand Medicaid. But Democrats wanted to reinvent health insurance in this country. Instead, they've made individual-coverage ruinously expensive — and have lavished health insurers with taxpayer subsidies to cover up their error.
American patients deserve affordable insurance options that aren't subject to Obamacare's cost-inflating rules and regulations. Today, one of the only forms of coverage that fits that description is short-term limited-duration health insurance.
These plans were originally conceived as a form of temporary insurance to fill unexpected coverage interruptions. But thanks to reforms implemented by former President Donald Trump, they've become a practical alternative to the overregulated insurance policies available on the Obamacare exchanges in the states where they're legal.
Sadly, the Biden administration has taken steps to roll back these reforms on the grounds that short-term plans are "junk insurance."
The irony of that claim is difficult to ignore. Over the last decade, Democrats have become the nation's leading purveyors of low-quality, high-cost health coverage. They are the ones endangering America's health — as well as its financial well-being — with "junk insurance."
And they've been clear that their ultimate goal is a complete government takeover of our healthcare system, in the form of single-payer or "Medicare for All."
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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