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Health Insurance Participation Rates Show Federal Reforms Are Working

November 14, 2019
By Brian Blase

The latest U.S. Census Bureau survey shows a sizable increase in the number of Americans without health insurance.

The number of uninsured climbed from 25.6 million in 2017 to 27.5 million in 2018. Only two demographic groups experienced significant declines in coverage: people in Medicaid-expansion states with incomes below the poverty line (about $25,000 for a family of four) and people with incomes above 400 percent of the poverty line (about $100,000 for a family of four).

Democrats were quick to argue the Trump administration is sabotaging Obamacare. The truth is that the administration has worked aggressively to increase options for affordable health care and address Obamacare’s failings. In fact, the Census Bureau numbers are further proof that the administration has taken the correct actions to date.

Obamacare Effect

Just before Obamacare took effect, government experts projected it would lead to nearly 30 million people being insured in the individual market by now. The new exchanges were supposed to offer attractive coverage. At the time, there were around 11 million people covered in the individual market, so the projected increase was substantial.

Obamacare, however, pushed up costs dramatically and caused insurers to leave markets. Rather than 30 million enrollees, only about 14 million enrolled — many of them shoved out of plans they liked. Nearly 70 percent of those enrolled now receive huge subsidies to afford their expensive policies, and millions of middle-income Americans who don’t qualify for subsidies have been priced out of the market. Federal taxpayers now are paying more than $50 billion a year in Obamacare subsidies, and new individual-market enrollment is up by only about three million people.

Obamacare has created a major incentive for people to wait until they need health care to purchase coverage. People can buy insurance after they are sick and still get the same rates as healthy people. Others stop paying premiums in the fall and, because of Obamacare’s design, can stay covered for the rest of the year. As they’ve learned more about how Obamacare works, it should not be surprising that more people have figured out how to game the system, causing higher premiums for others.

Four Market Solutions

Last year, the Trump administration reversed an Obama-era policy that severely restricted the ability of people to purchase short-term insurance coverage. The new rule gives Americans the ability to purchase more-affordable plans that allow their families to get insurance if they, say, lack workplace coverage, decide to further their education, or retire early.

The administration has made it easier for small businesses to band together and obtain the same advantages that large employers receive in offering insurance. Unfortunately, a dozen Democratic attorneys general are leading a lawsuit against this rule change, but the administration is fighting back in the courts.

Reversing another Obama-era policy, the Trump administration is allowing employers to make tax-free contributions to reimburse workers who purchase policies in the individual market. The administration estimates in five years, 800,000 employers, nearly 90 percent of them with fewer than 20 workers, will offer these Health Reimbursement Arrangements, covering more than 11 million people. Far from sabotaging the individual market, this will increase its size by an estimated 50 percent and reduce the number of uninsured by nearly one million.

Finally, the administration has approved several waivers allowing states to redirect money to finance care for those with expensive health conditions. The states that received these waivers had an average premium reduction of nearly 8 percent, compared to an average premium increase of 3 percent in other states.

Medicaid Smoke and Mirrors

The vast majority of Obamacare’s coverage gains have been achieved by putting able-bodied adults on Medicaid—traditionally a welfare program for the disabled and lower-income children, pregnant women, and some seniors.

States that adopted the law’s Medicaid expansion have experienced a surge in enrollment. Unfortunately, many enrollees have incomes well above the eligibility thresholds. Recent research shows two and a half to four million people may have been wrongly enrolled in Medicaid in 2017. Since 2017, states have had to bear a small but growing share of the expansion cost. Some are finally checking eligibility and removing people who are ineligible, which likely contributed to the two million person decline in Medicaid enrollment from 2017 to 2018.

It is especially notable that coverage among people below the poverty line in Medicaid-expansion states declined by 1.5 percent. Americans in this group are eligible for what is essentially “free” coverage through Medicaid, but a growing number of them are not enrolling, indicating the low value they place on the coverage. These individuals should not be thought of as uninsured in a practical sense, because they can generally enroll for coverage in the program after they receive services.

The Trump administration has expanded affordable options that will significantly increase the number of people with insurance, including individual-market Obamacare coverage. Far from proving the administration has “sabotaged” the law, the Census Bureau’s new data provide compelling support for the president’s actions.

 

Brian Blase, Ph.D. (brian@blasepolicy.orgis president of Blase Policy Strategies, a senior fellow at the Galen Institute, and served on the White House’s National Economic Council. An earlier version of this article was published at National Review Online, September 11, 2019. Reprinted with permission.

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