Those who think a Supreme Court decision makes ObamaCare a permanent feature of our lives need to read Robert Laszewski:
In the wake of the Supreme Court decision President Obama said, “the Affordable Care Act is here to stay.”
Will it be repealed and replaced by Republicans? I doubt it because it is so unlikely that Republicans will score the electoral trifecta Democrats did in 2008 by winning the White House, the House of Representatives, and having a filibuster proof 60 votes in the U.S. Senate and therefore have the power for a complete repeal and replace.
But does that mean Obamacare is “here to stay” as it is? It clearly is not.
Here is the answer in just one picture:
… Why is Obamacare still so unpopular?
The most recent Real Clear Politics average of recent Obamacare approval finds 43.6% favoring the law and 51.4% opposing it.
Why have so many more opposed Obamacare than approved it since its inception?
Just look at the picture.
For those eligible for Obamacare, an impressive 76% of those earning between 100% and 150% of the federal poverty level have signed up. [Note: the eligible up to 400% of the federal poverty level includes only those eligible for Obamacare’s insurance subsidies and does not include those in or eligible for employer-based plans.]
But after that income level the percentage of those eligible who have signed up drops like a rock.
The proportion of the population that is signing up for Obamacare is concentrated in the very lowest income categories while Obamacare is obviously unattractive to everyone else.
It’s no secret that wealthier consumers who make more than 400% of the federal poverty level, and therefore don’t get an Obamacare subsidy, have seen their individual health insurance rates increase substantially because of the new law and haven’t been happy about it.
So, this picture tells the story. Obamacare is unpopular because only the poorest have literally embraced it by buying it.
Why do they buy it? Because they pay very little in after subsidy premium and they get their deductibles and co-pays substantially reduced to boot.
And who votes? The poor don’t come to the polls in the same numbers as the rest of the population. Even in the 2008 election, with the first African American presidential candidate nominated by a major party on the ballot, only 52% of adults coming from families making less than $20,000 a year voted while 80% of the adults from families making over $100,000 voted.
Obamacare will never be popular, or a great vote getter, unless it meets the needs of other than the poorest.
Despite all of the subsidies, why aren’t the working class and middle-class signing up for it?
- The law requires people who do not have health insurance to buy Obamacare.
- If they do not buy it they are subject to a fine.
- Obamacare subsidies help people who can’t afford it pay for it.
- Obamacare is a monopoly—the only way in America you can buy individual health insurance is to buy an Obamacare compliant plan.
- The only place you can get an insurance subsidy is on the Obamacare exchanges.
- People generally want to have health insurance.
After all of this and two complete open enrollments, only 40% of those who are eligible for Obamacare have signed up—far below the proportion of the market insurers have historically needed to assure a sustainable risk pool.
If this were a private enterprise enjoying these kinds of benefits, and only sold its product to 40% of the market, its CEO would be fired.
Looking at this picture, only 20% of those eligible for Obamacare, who make between 251% and 300% of the poverty level, bought Obamacare. Why?
According to the Kaiser Calculator, a family of four making $60,300 a year (253% of poverty) would still have to pay out premiums of $4,934 a year (8.18% of household income) for the second lowest cost Silver Plan after their Obamacare subsidies. The good news is this is about half the price of an unsubsidized policy.
The bad news is Obamacare would still cost this family $4,934 a year for a policy with an average deductible of almost $2,900. How many families making $60,000 have an extra $4,934 in their budget for a policy that will likely pay them almost nothing?
Apparently, many of these families have concluded that they are better off staying uninsured and paying for their health care costs out-of-pocket.
Of course if someone in the family is really sick even premiums and deductibles this high can be a great deal.
And therein lies the challenge as the administration tries to sign-up enough healthy people to offset the cost of the sick, who will join no matter what the price, and keep premiums affordable.
Why is the Obamacare population sicker and causing so many big 2016 rate increases a year earlier than expected?
Because, the very poor aside, the people who most often see value from Obamacare’s high priced policies and big deductibles are those who know they will use it and take more money out of the system then they will put into it.
That the Obamacare exchange population is a lot sicker than the off-exchange population has been clearly demonstrated by a recent research brief, “Understanding the Exchange Population: A Statistical Snapshot,” from Truven Health Analytics.
Among Truven’s findings was the fact that the on-exchange population had 39% more hospital admissions and 64% more emergency room admissions, have a “significantly higher prevalence of chronic conditions,” is much older, and has a higher use of expensive specialty drugs, than the off-exchange population.
The Truven data also reaffirmed the notion that most exchange participants are the poorest who, unlike everyone else, benefit from substantially reduced deductibles and co-pays because of cost sharing reductions: “For all of the exchange members we found that most (73%) are enrolled in a [cost sharing reduction] plan, and most of these enrollees (44%) are in the Silver plan with an actuarial value of 94% [the most generous of plans].”
Is Obamacare financially sustainable in its present form?
Just look at the picture.
To be financially sustainable Obamacare is going to have to attract a lot more people. This program, with its high after subsidy premiums and huge deductibles, simply isn’t attractive to most consumers—unless a person is really sick. So, far the only people attracted to Obamacare are the poorest—whose premiums and out-of-pocket costs are very attractive.
Is Obamacare politically sustainable as it is?
Supporters have often pointed to surveys that say Obamacare participants are very happy with their policies, including one that found that 86% were happy with their coverage.
Of course they are! Just look at the picture. The majority of people who bought it are poor and therefore have very low premiums and out-of-pocket expenses. Marketing 101 would suggest that these supporters should also ask the 60% of the people who didn’t buy it how they feel about Obamacare.
So far Obamacare is popular among the poor people who disproportionately get the benefits. It is not popular among the people who get far less out of the program, are the taxpayers who have to pay for it, and also are the people who vote the most often.
If the only information you had about Obamacare you got from this picture, would it look to you like Obamacare is both financially and politically sustainable?
The good news is that Obamacare dodged a huge bullet when the Supreme Court upheld its subsidies in 34 states.
The bad news is that it is still Obamacare.
For health insurance reform to be both politically and financially sustainable Obamacare will have to be materially changed and I have no doubt, that when the 2017 rates are known to all of the people going to the polls in late 2016, there will be an undeniable mandate to change it come 2017–no matter who wins the election.