Report: Unsubsidized Individuals Are Fleeing the Obamacare Exchanges
The Obamacare exchanges are having an increasingly difficult time keeping people who must pay the full premiums out of their own pockets, the Centers for Medicare and Medicaid Services report.
Although overall enrollment in Obamacare exchanges remained steady in 2018-19, the story was quite different for those not qualifying for the Affordable Care Act’s federal subsidies, known as advanced payment of premiums tax credits, or APTCs. Between 2016 and 2018, 2.5 million unsubsidized people dropped out of the exchanges, a 40 percent decline, the CMS reports.
“As President Trump predicted, people are fleeing the individual market,” said CMS Administrator Seema Verma in a press release. “Obamacare is failing the American people, and the ongoing exodus of the unsubsidized population from the market proves that Obamacare’s sky-high premiums are unaffordable.”
Unaffordable, Sky-High Premiums
The latest figures on Obamacare enrollment are in two CMA reports: “Early 2019 Effectuated Enrollment Report” and “Trends in Subsidized and Unsubsidized Enrollments Report.” These documents provide information on the stability of the individual health insurance market during the 2018 plan year and offer preliminary insights into the 2019 market.
In 2018, the average monthly enrollment in the exchanges increased by 1 percent over 2017, and the early 2019 data show that by February, 10.6 million consumers had continued to pay their premiums, about 1 percent less than at the same time last year, CMS found.
The 2019 decrease occurred even though the Trump administration took steps to reduce the average monthly premium by 1 percent from the previous year, according to CMS.
“In part, actions taken by the Trump Administration to promote more stability, including the finalization of the Market Stabilization Rule in 2017 and rulemaking to give states new tools and flexibility in regulating their insurance markets have helped to lower premiums and increase choice,” CMS said in its press release. “As a result of increased efficiency, the administration also reduced the user fee charged to insurers on the Federally Facilitated Exchanges beginning with the 2020 plan year, a reduction that will be passed on to consumers in the form of lower premiums next year.”
Priced Out of the Market
CMS found people who do not qualify for the APCT are increasingly being priced out of the market. Following a decline of 1.3 million people in 2017, another 1.2 million unsubsidized people left the market in 2018.
“These enrollment declines among unsubsidized enrollees coincided with increases in average monthly premiums of 21% in 2017 and 26% in 2018,” CMS stated.
People receiving subsidies through the APTC are largely shielded from these premium increases, a major reason why their enrollment numbers have remained steady. Those not eligible for subsidies have been bearing the brunt of the ACA’s rise in premiums.
The rising cost of Obamacare plans over the years is driving consumers to new alternatives, says Philip Eskew, physician, attorney, founder of DPC Frontier, and policy advisor to The Heartland Institute, which publishes Health Care News.
“As patients learn about other options outside of traditional insurance, such as health sharing ministries combined with direct primary care practices, they pursue them in increasing numbers,” said Eskew.
“My hope is that one day patients will realize three truths,” said Eskew. “One, most of health care can be delivered in the primary care setting; second, most of this care is affordable; and third, it should never be their goal to meet their health insurance deductible but rather to never use their insurance at all.”
Uninsured Rates Climb
In a related development, the Census Bureau on September 10 reported the number of Americans without health insurance climbed by 1.9 million in 2018, the first year-to-year increase since the ACA was passed in 2010 . The Census Bureau said 27.5 million people did not have health insurance in 2018. The increase in uninsured coincided with the drop in unsubsidized enrollees at the Obamacare exchanges.
“ACA plans don’t offer good value to most consumers as an insurance product, but as an entitlement for individuals with preexisting conditions and those who are eligible for subsidies, it seems to have established a stable pool of enrollees,” said Chris Pope, a senior fellow at the Manhattan Institute. “The increase in the number of Americans uninsured is very slight and largely reflects the growth in incomes pushing households above the eligibility cutoff for Medicaid. Next year’s data, which will reflect the repeal of the individual mandate, may show a more significant shift.”
Who’s Dropping Insurance
To get a better picture of why people are dropping insurance, it is helpful to look at the demographic groups where it is occurring, says Brian Blase, president of Blase Policy Strategies and a senior fellow at the Galen Institute (see commentary, page 21).
Not only did the numbers rise among people with incomes above 400 percent of the poverty line, but also among people below the poverty level in states that expanded Medicaid. That tells us two things, says Blase.
“One, [the uninsured] placed little value on the coverage over time, as more of them are not signing up, but the other important point is these people are not insured,” said Blase. “You can sign up for Medicaid retroactively. If you go to the hospital and you’re poor and you don’t have coverage, they’ll sign you up for Medicaid once you are there or at discharge.”
Blase says uninsured rates are not going up in states that didn’t expand their Medicaid programs.
“What is going on there is the economy grew,” said Blase. “Employers compete for workers by offering wages and benefits, and some of these poor individuals are working, and they enrolled in private coverage. Unlike in expansion states, the government program did not crowd out private coverage.”
Bonner R. Cohen, Ph.D., (firstname.lastname@example.org) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow (CFACT).