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Rumors of Obamacare's death: Greatly exaggerated

The Affordable Care Act hasn't attracted as many signees as the White House predicted, but conservative predictions of a 'death spiral' were off the mark, too.

By Money Staff Feb 13, 2014 1:56PM

This post comes from Avik Roy at partner site on MSN MoneyFor quite some time now, a cohort of conservative pundits and politicians has confidently predicted that Obamacare will "collapse under its own weight." But the latest sign-up numbers from the Obama administration tell a different story.

Prescription medicine expenses © Don Farrall/Photodisc/Getty ImagesWhile fewer people than projected are signing up for Obamacare-based insurance, the numbers aren't so far off as to indicate an all-out catastrophe, what health wonks call an "adverse selection death spiral."

The reality is more prosaic. Obamacare will be costlier, and less successful, than its cheerleaders have promised. But the law, and its trillions in taxpayer-funded subsidies, won't disintegrate on their own.

On Wednesday, the Office of the Assistant Secretary for Planning and Evaluation of the U.S. Department of Health and Human Services released updated figures for those who have signed up for health insurance on the Obamacare exchanges. (As a reminder, signing up is not the same thing as actual enrollment in a health insurance plan; somewhere between 30 to 50 percent of those who have "selected a marketplace plan" on the exchanges will not end up paying the first month's premium, and will thereby never formally enroll in health insurance.)

Sign-ups continue to skew older

One of the big problems with the exchanges is that the people signing up for coverage appear to be older and sicker than the U.S. population. That trend continued with the latest update, though the age skew slightly improved compared to the end of December. (The percentage of signer-uppers under the age of 35 improved from 29.9 to 30.8.)


However, there was one good piece of news in terms of age skew. One concern that I'd had over the past few months was that younger, healthier individuals would sign up for cheaper, high-deductible Bronze plans, whereas older, sicker individuals would sign up for the low-deductible Silver plans.

Thus far, that doesn't appear to be happening, except among children. Among signer-uppers under the age of 18, 21 percent selected a Bronze plan, and 45 percent selected Silver. Among everyone else, however, the numbers were fairly consistent. Between 14 and 17 percent of adults chose Bronze plans, and between 63 and 68 percent chose Silver plans.

Taxpayer-funded subsidies are cushioning adverse selection

This lack of adverse selection among the various metal tiers of Obamacare-approved health plans is almost certainly due to the law's premium support insurance subsidies. In the federally sponsored exchanges, 72 percent of those eligible for subsidies picked the financially generous Silver plan. Among those who didn’t qualify for subsidies, only 25 percent picked a Silver plan.

Overall, 82 percent of those signing up on the Obamacare exchanges were eligible for some kind of subsidy. And this is how Obamacare is likely to work going forward. It'll be a terrible deal for those who don't qualify for subsidies, or who only qualify for a small subsidy. It'll be a great deal for those whose incomes are closer to the federal poverty line.

This isn't a surprising outcome. In states like New York and New Jersey, this two-tiered system existed prior to Obamacare, in which those eligible for subsidies could buy affordable coverage, while those ineligible for subsidies were priced out of the market.

States that refused to implement Obamacare are outperforming those that did

One of the silliest talking points in defense of Obamacare's underperformance to date is that it has been Republicans' fault. "If only Republicans would implement the law of the land," goes the line, "Obamacare's enrollment figures would be much better than they are." It turns out that the numbers tell exactly the opposite story. The states that didn't set up their own exchanges are, on average, signing up many more people than their supposedly pro-Obamacare counterparts.

Phil Klein of the Washington Examiner compared the latest sign-up figures to the enrollment targets that the Obama administration set in September 2013 for the same time period. I've replicated his analysis, and compared the progress of states that set up their own exchanges -- "State-Based Marketplaces" in HHS lingo -- to those that deferred to the federal government ("Federally-Facilitated Marketplaces").

Among states that refused to set up their own exchanges -- the allegedly uncooperative states -- 1,939,588 people have signed up for coverage, amounting to 79.4 percent of the September 2013 enrollment target. Among the states with their own exchanges -- the most pro-Obamacare states -- only 1,359,904 people have signed up, amounting to 69.8 percent of the September target. That’s a meaningful 10 percentage-point difference in favor of the states that refused to set up their own exchanges.


Remember, again, that "signing up for coverage" is not the same thing is enrollment, and therefore that these figures overstate the actual enrollment performance. But if you generously assume that sign-ups equal enrollments, 11 states are exceeding their September targets: Connecticut (238 percent), Rhode Island (212), New York (156), Maine (144), New Hampshire (143), North Carolina (135), Idaho (133), Colorado (120), Wisconsin (115), Michigan (112), and Florida (100). At least thirteen states are below 50 percent of their enrollment target: Massachusetts (5), D.C. (18), New Mexico (23), Oregon (23), Maryland (31), Nevada (32), Kentucky (36), Alaska (41), Washington (42), South Dakota (43), Iowa (46), Oklahoma (47), and Mississippi (48).

How many of the sign-ups were previously insured?

One issue that has emerged is whether or not all of these sign-ups are people who were previously uninsured. After all, Obamacare's upending of the U.S. health-care system is designed to provide health coverage to the uninsured. Thus far, surveys indicate that more than two-thirds of those signing up were previously covered. A McKinsey survey found that 89 percent of those signing up on the exchanges had been previously insured. If those trends continue, Obamacare will fall well short of its aspiration to reduce the uninsured population by 30 million people. But Obamacare can fail to cover the uninsured, and also fail to collapse.

Bottom line: Obamacare is underperforming; it's not collapsing

One of the unseemly aspects of the last four-plus months is watching some on the right root for Obamacare to fail. Whatever your political affiliations, it’s not a good thing if Obamacare wrecks the health care system. Real people -- real lives -- will be harmed, and are being harmed, as Obamacare makes health insurance even less affordable for many in the middle class.

In some quarters, there has been a kind of intellectual laziness, a belief that there’s no need for critics to come up with better reforms, because Obamacare will "collapse under its own weight," relieving them of that responsibility.

Obamacare isn’t good for the country. But it’s not going to collapse. And that makes the development of a credible, market-oriented health-reform agenda more urgent than ever.

More from

Feb 13, 2014 2:13PM
"Obamacare will be costlier, and less successful, than its cheerleaders have promised."

Who'd thunk?
Feb 13, 2014 3:01PM
The truth is we haven't seen anything yet!  With 28 waivers, delays and extension; the real pain hasn't even got here yet!
Feb 13, 2014 2:21PM

obamacare will give the same results as our government run education systems. tremendous infrastructure with little substance as to the final results.

Feb 13, 2014 2:31PM
what else isn't going away:  the 50 pages of regulations on how I'm supposed to write simple notes to document my patient treatment, the impossible to decipher Medicare regulations on how I am  to treat my paitients, the much higher deductbles my family members are paying, the longer waiting times to see a doctor.  What is going away: about half the hospital  options on the prior policy-(including the Children's Hospital, no longer covered) along with many specialists and a lot of general practitioners. So the Administration says all the new services have to be covered, they didn't say you could realistically think you would get them without an excessively long wait or drive.
Feb 13, 2014 3:45PM
You people voted for Him, now you can have Him !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Feb 13, 2014 2:20PM

I am sure ObamaCare will crash in burn soon enough.  Once the truth comes out about the insider trading and how it is negatively effecting the job market.

Feb 13, 2014 3:13PM
Gee...   Surprised they even mentioned the Obamacare numbers...

Internally they really are pretty bad.  3.3 million in total, with less that 24% (goal 41%) in the 18-34 range, and the majority of those are women, already expecting.  Now subtracting out the 2 million or so that are new Medicaid patients, it looks like the taxpayers are going to get killed.  Of those remaining, some say well over 75% are high risk people who lost their coverage.  And even at that no one is saying how many have paid.  That number has been estimated between 20-80% depending on who you listen too.   I suspect it isn't good or the White House would release the number, they cannot be that inept at counting.  

All in all a very bad start, and awful results.  A complete and utter failure...

But I suppose it is better than concentrating on this weeks abysmal jobs numbers, given that many of the seasonal workers will be back on unemployment in the next few weeks....

Epic Failure, is about the only description that defines Obamanomics....
Feb 13, 2014 2:37PM

One of the unseemly aspects of the last four-plus months is watching some on the right root for Obamacare to fail. Whatever your political affiliations, it’s not a good thing if Obamacare wrecks the health care system. Real people -- real lives -- will be harmed, and are being harmed, as Obamacare makes health insurance even less affordable for many in the middle class.

Have you been asleep for the last few months? This has already happened! Millions losing there current plans and cost of insurance plans sky rocketing! Real People and Real Lives already have been harmed by these idiots in Washington! Give me a Break this sounds like a cheerleading story when you have nothing to cheer.  

I told my Senators at the time that I would not submit to a program that forced me into things and I will Never sign up for this program.  2/3'rds of my state agreed with me yet our Senators decided they didn't care and voted for this monstrosity anyway and now we are told we just don't understand they program. On the contrary we do understand. 

Feb 13, 2014 5:03PM
Obama keeps changing the rules to benefit his party in the midterms, which means he knows it is a crap law! 
First time I read the title I missed "care" in "Obamacare"  and thought something happened to Obozzo.

But I am sure with the ACA providing care for him he will reign I mean live to be 200....

Wait a minute.... HE doesnt even use the ACA.... Just us peasant  bottom feeders.......

Feb 13, 2014 4:46PM
Who said Obamacare is dead?  The people who have been forced into the system, that's who.  Time itself will tell that Obamacare is dead.  When something is a good idea and successful, it is not necessary to lie and cheat and distort the facts.
Feb 13, 2014 3:16PM
To bad. They both should be dead and do us a favor.
Feb 13, 2014 4:52PM

Hmm... 6M+ have lost their plans, 3.4M have signed up and a majority of those that signed up already had coverage... So a net loss of over 2.5M people with insurance is somehow not a failure?

What happens when they stop delaying the employer mandate and millions more loose their plans?

But hey, at least they have the amount of young people they need to drive costs down for everyone.. oh wait, they don't! 

Obamacare = Epic Fail + Facepalm

Feb 13, 2014 5:02PM

Just a couple of questions if things are going so well.  1) Why the postponement of the business mandate?  2) How many people are enrolled that are not getting subsidized?  3) How many enrollees are Medicaid applicants?



Feb 13, 2014 4:37PM

Do to the excitement I misread the head lines

I thought it said Obama is dead

Feb 13, 2014 4:49PM
More folks in Nevada have signed up for Medicaid than for paid policies.
Feb 13, 2014 5:26PM
The American people say it should be dead, that's who.
Feb 13, 2014 5:16PM
I tried the signup and here is what I came up against. I let the exchange pull my Tax filing info for last year. My taxable income was 14K. I have a wife and step daughter( she is a full time student). After all was said and done insurance was going to cost me $ 682.00 per month ($ 8,184.00 per year) with a $ 12,000.00 deductable. That totals $ 20,184.00 for a year, that is more than I make in a year. I think I will pass at this time.
Feb 13, 2014 3:26PM
So I search for any article containing the words "obamacare" or "obama", pop some popcorn and sit back and watch the $hit fly :)
Feb 13, 2014 4:34PM
These social programs seem to have a trend.  Do not have to earn anything anymore, and if your try, no help.  Some people think this is a good idea.  Forward to quadrillions and future generations will feel the heavy tax burden, including Medicare.
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