By Sally C. Pipes
President Obama marked the fourth anniversary of the passage of ObamaCare this week by promising to spend the next year “working to implement and improve on it.” He has his work cut out for him. Four years on, the Affordable Care Act has failed to deliver what its name formally promised—and is shaping up to be decidedly unaffordable for taxpayers. Consumers ought to hope that ObamaCare doesn’t make it to the age of five—and that lawmakers enshrine market-friendly, patient-centered reforms in its place.
Four years after passage—and six months after they were supposed to be fully operational—ObamaCare’s insurance exchanges are still malfunctioning. Last week, just days before the end of the open-enrollment period, the Philadelphia Inquirer discovered that the federal exchange website, HealthCare.gov, was displaying incorrect information about the subsidies for which shoppers should qualify.
The trillion dollars the Administration has earmarked for subsidies won’t make insurance more affordable if consumers can’t actually claim them. Online insurance marketplace eHealthInsurance estimated last week that ObamaCare had pushed premiums in the individual market up by as much as 59 percent this year, thanks to its myriad and costly new benefit mandates, taxes, and fees. Industry officials now say that rates could double in many areas of the country next year.
With the cost of coverage skyrocketing, it’s no wonder that enrollment has lagged the Obama Administration’s goals. One-fifth of those whom the Administration has counted as “enrolled” don’t appear to have paid their premiums. So they don’t actually have coverage.
Further, despite millions of dollars in advertisements, endless stumping by the president, and promotion by the likes of NBA stars Kobe Bryant and LeBron James, the exchanges have failed to attract anywhere near enough young people. Without sufficient premium income from these young, largely healthy individuals, the marketplaces will not be able to shoulder the costs associated with treating older, less healthy folks. Officials originally estimated that 40 percent of enrollees would need to be between the ages of 18 and 34 for the exchanges to be solvent. Thus far, this coveted demographic has accounted for just 25 percent of enrollment. If the exchanges flop, taxpayers could be forced to bail them out.
Small businesses that had been promised repeatedly by Obama that they’d save money learned in late February that two-thirds of them would see their premiums climb because of the law.
ObamaCare is even failing to expand coverage to the uninsured. A McKinsey study found that only a fraction of those who enrolled in the exchanges had previously been uninsured. The same study found that half of those who did not enroll pointed to “affordability”—or a lack thereof—as their main reason for choosing not to purchase coverage.
With the exchanges foundering and several directors of state exchanges resigning (The Oregonian dubbed Cover Oregon’s leadership changes “a major managerial house-cleaning”), the Administration has taken to rewriting the law to try to avoid open revolt. The over 5 million consumers whose plans were previously canceled because they didn’t meet ObamaCare’s stringent benefit requirements can now keep them through 2017, three years longer than the law originally prescribed. The Administration has also given people whose plans were canceled a “hardship exemption” so that they can dodge the individual mandate through 2016.
Many of those who have chosen to buy ObamaCare-approved coverage have been outraged to find that their policies permit them to visit only a handful of doctors and hospitals. So much for the President’s oft-repeated promise, “If you like your plan, you can keep it.” The Administration has responded by forcing plans to expand their provider lists in 2015. That decision may only hike rates further come next year. And recent media stories have been confirming as much.
By tweaking the law on the fly, the Administration is punting its problems down the road. Industry officials specifically point to the Administration’s various delays and changes as the main culprit for rate hikes. One insurance company representative told The Hill that his firm’s rates would triple on the exchange next year.
It doesn’t have to be this way. We can expand access to coverage for those with preexisting conditions, reduce costs, and lower the uninsured rate without disrupting Americans’ coverage and increasing their premiums. The president chose to cover those with pre-existing conditions in the most expensive way possible—by requiring insurers to offer policies to all comers and forbidding them from charging anyone more than three times what they charged anyone else. So insurers just hiked rates for everyone.
A more cost-effective way to minister to those with pre-existing conditions is by expanding federal funding for state-level high-risk pools. Many such pools were functioning well before ObamaCare, furnishing coverage to those who couldn’t get it on the open market without jacking up premiums for the rest of the population.
Meanwhile, the chief obstacle to covering the uninsured is affordability. Market forces could break that barrier down. Letting consumers buy across state lines, for instance, would increase competition among insurers and encourage state regulators to limit unnecessarily costly benefit mandates. Expanding health savings accounts (HSAs), where people can save money pre-tax for health care services, would give patients control over their health care dollars and encourage them to spend wisely. The explosive growth of HSAs in the employer market is one reason that health costs have been growing more slowly than the historical average in recent years.
Another way to make health insurance more affordable? Allow individuals to purchase coverage with pre-tax dollars, just as businesses can. Such a move would grant consumers the opportunity to choose coverage that suits their needs and budget—not their employer’s. And to ensure that low-income individuals could take advantage, the government could offer a refundable tax credit toward the purchase of health insurance.
As ObamaCare turns four, a clear majority of Americans stands opposed to it. Here’s to hoping that this anniversary is among the law’s last.
Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.