To the right’s dismay, scare tactics – remember death panels? – and spurious legal challenges failed to protect the nation from the scourge of guaranteed health coverage. Still, Obamacare’s opponents insisted that it would implode in a “death spiral” of low enrollment and rising costs.
But the law’s first two years of full implementation went remarkably well. The number of uninsured Americans dropped sharply, roughly in line with projections, while costs came in well below expectations. Opponents of reform could have reconsidered their position – but that hardly ever happens in modern politics. Instead, they doubled down on their forecasts of doom, and hyped every hint of bad news.
I mention all of this to give you some perspective on recent developments that mark a break in the string of positive surprises. Yes, Obamacare has hit a few rough patches lately. But they’re much less significant than a lot of the reporting, let alone the right-wing reaction, would have you believe. Health reform is still a huge success story.
Obamacare seeks to cover the uninsured through two channels. Lower-income Americans are covered via a federally-funded expansion of Medicaid, which was supposed to be nationwide but has been rejected in many Republican-controlled states. Everyone else has access to policies sold by private insurers who cannot discriminate based on medical history; these policies are supposed to be made affordable by subsidies that depend on your income.
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Nobody ever expected Obamacare to cover all the uninsured. In fact, Congressional Budget Office projections made in 2013 suggested that about 10 percent of nonelderly U.S. residents would remain uncovered: some because they are undocumented immigrants, some because of the gap created by red-state Medicaid rejection and some because they would fall through the cracks of a complicated system. But the law was nonetheless projected to produce a sharp reduction in the number of Americans without insurance, and it has, especially in states like California that have tried to make it work.
Meanwhile, both insurance premiums and the cost of subsidies designed to make them affordable came in far below expectations in both 2014 and 2015.
Sooner or later, of course, there were bound to be some negative surprises. And we’re now, finally, getting a bit of bad, or at least not-great, news about health reform.
First, premiums are going up for next year, because insurers are finding that their risk pool is somewhat sicker and hence more expensive than they expected. There’s a lot of variation across states, but the average increase will be around 11 percent. That’s a slight disappointment, but it’s not shocking, given both the good news of the previous two years and the long-term tendency of insurance premiums to rise 5-10 percent a year.
Second, some Americans who bought low-cost insurance plans have been unpleasantly surprised by high deductibles. This is a real issue, but it shouldn’t be exaggerated. All allowed plans cover preventive services without a deductible, and many plans cover other health services as well. Furthermore, additional financial aid is available to lower-income families to help cover such gaps. Some people may not know about these mitigating factors – that’s the problem with a fairly complex system – but awareness should improve over time.
Finally, UnitedHealth Group made a splash by announcing that it is losing money on the policies it sells on the Obamacare exchanges, and is considering withdrawing from the market after next year. There were some puzzling things about the announcement, leading to speculation about ulterior motives, but the main thing to realize is that UnitedHealth, while a huge provider of employment-based insurance, is actually a fairly small player in this market, and that other players are sounding much more positive.
Oh, and official projections now say that fewer people will enroll in those exchanges than previously predicted. But the main reason is that surprisingly few employers are dropping coverage; overall projections for the number of uninsured Americans still look pretty good.
So where does that leave us? Without question, the run of unexpectedly good news for Obamacare has come to an end, as all such runs must. And look, we’re talking about a brand-new system in which everyone is still learning how to function. There were bound to be some bobbles along the way.
But are we looking at the beginnings of a death spiral? Some people are indeed saying that, but as far as I can tell, they’re all people who have been predicting disaster every step of the way, and will still be predicting imminent collapse a decade from now.
The reality is that Obamacare is an imperfect system, but it’s workable – and it’s working.