The Truth Behind Obamacare Numbers

COMMENTARY Health Care Reform

The Truth Behind Obamacare Numbers

Nov 6, 2014 3 min read
COMMENTARY BY
Edmund F. Haislmaier

Senior Research Fellow, Center for Health and Welfare Policy

Ed is an expert in health care policy and frequently is asked to help lawmakers design and draft reforms to the health systems.
As a presidential candidate, Barack Obama promised that his health reform plan would "lower premiums by up to $2,500 for a typical family." So it's not surprising that many people are dismayed by the rising costs under the health reform law he subsequently signed.

But the president and the lawmakers who created Obamacare were always far more focused on increasing coverage than on reducing costs. That's why two of the law's central provisions were expanding Medicaid eligibility and creating new government-run exchanges offering subsidizing health plans.

Given that focus, one natural question since the Obamacare rollout ended in April has been, "How much did Obamacare increase health insurance coverage?" While various guesstimates have been offered, we can now answer that question with real numbers.

The latest enrollment data for Medicaid and private plans show that the number of Americans with coverage increased by 8.5 million during the first half of 2014. However, 6.1 million of that number were new Medicaid enrollees, with private-market enrollment increasing by 2.4 million individuals.

In other words, 71 percent of the total coverage gain came from Obamacare expanding Medicaid to able-bodied, working-age adults.

Digging further into the private market data, we find that the number of people covered by individual-market plans increased by 6.2 million, but that the number of those with employer-group coverage declined by 3.8 million. Thus, the drop in employment-based coverage offset 61 percent of the growth in individual-market coverage, resulting in a net increase in private coverage of only about 2.4 million.

The Medicaid numbers show that enrollment growth there was almost entirely due to Obamacare expanding the program to able-bodied, working-age adults. Half the states had the Obamacare Medicaid expansion in effect during the first six months of 2014, and those states accounted for 94 percent (5.7 million) of the 6.1 million individuals added to the Medicaid rolls during the period.

In contrast, the states that did not adopt the expansion collectively added only 355,000 people to Medicaid, reflecting modest growth in the populations traditionally covered by Medicaid - poor children, low-income pregnant women and disabled adults.

Separately, the Obama administration reported in May that 8 million people picked a plan through the exchanges during open enrollment - a figure that does not include new Medicaid enrollees. In September, the administration revised that 8 million figure down to 7.3 million people who actually completed the transaction and paid their first month's premium.

Yet the enrollment data show that the number of people covered through private individual-market plans (both on and off the exchanges) actually increased by only 6.2 million - not by 8 million, or even 7.3 million.

As noted, employment-based coverage also declined by a net of 3.8 million individuals during the period. Assuming that most of those individuals got replacement coverage through the individual market, that brings the increase in private coverage down to just 2.4 million people.

What this means is that, of the individuals who obtained coverage through the new Obamacare exchanges, no more than 2.4 million were previously uninsured. The rest of the Obamacare exchange enrollments appear to have resulted from a substitution effect - meaning enrollment in new exchange plans by people who previously had coverage through either an individual-market or employer-group plan.

These data tell us two basic things about Obamacare's performance.

First, when it comes to covering the uninsured, Obamacare is so far mainly an expansion of Medicaid.

Second, the new government exchanges didn't enroll many people who were previously uninsured.

The problem with Obamacare mainly being a Medicaid expansion is that the new Medicaid enrollees are not the vulnerable poor - children and disabled adults - that the program was designed to serve. Rather, they are able-bodied, working-age adults who have low incomes because they are either unemployed or under-employed.

Furthermore, 82 percent of the adults that qualify for the Obamacare Medicaid expansion don't even have dependent children. Giving those individuals Medicaid may increase the number of American's with health insurance coverage, but it doesn't provide them with what they need most: gainful employment.

Indeed, as the Congressional Budget Office has noted, expanding Medicaid to that population will actually discourage many of them from taking a job or working more hours if doing so means losing Medicaid coverage.

With respect to the new exchanges, the majority of enrollees apparently were people who already had coverage. It is also likely that many of them had to get new coverage because Obamacare forced their insurer or employer to discontinue their old plan.

That's not exactly the "if you like your plan, you can keep it" promise made by the president and many congressional supporters of Obamacare.

 - Ed Haislmaier is a senior research fellow in the Center for Health Policy Studies at The Heritage Foundation.

Originally distributed by the Tribune Content Agency

Donate to The Heritage Foundation

Our more than 100 policy experts and researchers are invited to testify before Congress nearly 40 times a year

DONATE TO HERITAGE