This commentary originally appeared in Forbes on September 17, 2014.
Glance at recent Obamacare headlines and you might think the healthcare law has turned out to be a smashing success, its initial glitches and legal foibles forgotten in the face of incontrovertible achievements.
The proof is supposedly in the data, and we’re told the latest data is a clear victory for the Affordable Care Act. “Another day, another survey showing that Obamacare is beginning to cure American’s uninsured problem,” led HuffPo’s coverage this week of two surveys showing a drop in the uninsured rate. “CDC: Uninsured rate now the lowest on record,”ran the headline at Vox, followed by the observation that, “This is, in part, a reflection of Obamacare.”
The surveys, one from the Centers for Disease Control and the other from theU.S. Census Bureau, do indeed show a declining uninsured rate nationwide. But as with so much of the data on Obamacare, they don’t really tell us much more than that. Considered in the light of other evidence, however, they do help illuminate the shell game surrounding Obamacare, whereby the administration and the media inflate the law’s achievements and hide its growing costs from American taxpayers.
The CDC report largely confirmed what we already knew. In the first quarter of 2014, when the major provisions of the Affordable Care Act kicked in, the number of uninsured dropped by some millions. The CDC survey put the number at about 3.8 million, mostly from those who gained coverage through the ACA’s health insurance exchanges or Medicaid expansion, both of which were aimed at covering the previously uninsured. (As some have noted, the figure doesn’t account for the late surge in enrollment at the end of March, so the total is likely higher than 3.8 million.)
But how many of those who signed up were previously uninsured? We don’t know and probably never will because the Obama administration declined to collect this information. We do know, however, that about 6 million people lost their coverage last fall because their plans did not comply with ACA requirements, and that amid public outcry the Obama administration unilaterally decreed that those with noncompliant plans could keep them another year or so.
Other problems are also beginning to surface. New reports this week warned 115,000 immigrants could lose coverage purchased on the Obamacare exchanges for failing to verify their citizenship or immigration status, while another 363,000 could lose subsidies for health coverage because their reported income conflicts with federal tax records.
All that to say it’s unclear what effect Obamacare is going to have on the uninsured rate when the dust finally settles. The Census report that came out this week is unlikely to clear things up. It is notable not for what it reveals about the uninsured rate, which stood at 13.4 percent in 2013, but for its inauguration of a new era in the Current Population Survey—one that renders all previous CPS data on the uninsured obsolete. In statistician’s parlance, the newly-redesigned CPS represents a “break-in-series,” such that Census won’t be able to compare data from previous years with the data collected under the new method. They will only have data from 2013, the year before most major provisions of the ACA took effect, rather than the decades’ worth of data collected under the old method.
The change, announced in April, might not have been a nefarious plot by the administration to render an assessment of the law’s effects impossible—and indeed, the new method appears to be a more accurate measure of the uninsured rate—but the timing was terrible. It was always unclear why the change couldn’t have been delayed, even for a year, in order to get a better picture of pre- and post-ACA uninsured rates. Census officials called the timing “unfortunate” but “coincidental.”
A study published earlier this month by the American Action Forum corroborates the Fed surveys. It found that among small businesses (those with between 20 and 99 workers) ACA regulations have reduced employee pay by at least $22.6 billion annually and rising premiums have reduced employment by about 350,000 jobs nationwide. The study’s authors note that while they found no relationship between premiums and employment prior Obamacare, “since 2010 small businesses have slowly started shedding jobs and reducing wages. We found that, on average, employees who work a full year for a business with 50-99 employees lose $935 annually due to ACA regulations, while employees of businesses with 20-49 employees, on average lose $827.50 annually.”
These effects of the law not are likely to get much play in the national press, where charting reductions in the uninsured rate can pass without mention that Obamacare arguably has little to do with it. One sees this throughout coverage of the ACA. The press much prefers touting gains in coverage through Medicaid expansion, for example, to writing about how Medicaid is straining state budgets even as it provides the worst health coverage in the country.
Same goes for premiums, which we’re told will actually decrease in some exchange markets next year, while increases in employer-sponsored coverage will be an “extraordinarily modest” 3 percent. What we won’t hear much about is the Obamacare reinsurance program that protects insurers from losses on the exchanges through 2016. The Obama administration quietly lifted the reimbursement limits this summer to induce carriers to post lower premiums this fall. Bob Laszewski, a widely-respected health policy wonk and former insurance executive, says the premium drop in some markets is actually a result of dysfunctional exchange design. Plans that dropped their premiums are more likely to serve as the new baseline plans on which subsidies will be based, and those are not necessarily the same baseline plans from last year:
The new 2015 Silver baseline plan may have a lower premium than the 2014 Silver baseline plan. But that is almost always because the insurance company that held that slot in 2014, and almost always got the largest share of business, significantly increased their rates for 2015… So, this headline about the baseline plans decreasing their rates in so many markets is more about the carriers who sold the most in the first year increasing their rates while the plans that sold very little business, and able to fall back on the Obamacare reinsurance scheme, cut their rates in a no lose attempt to gain business.
The reinsurance scheme, according to Laszewski, has succeeded in suppressing premium hikes this year and giving the appearance that the exchanges are sustainable. Meanwhile, insurance carriers selling coverage on the exchanges “have nothing to lose” by lowering their rates now. They know that no one will know the real Obamacare rates until 2017, when the reinsurance program ends.
But don’t expect to hear much about any of this until the new enrollment period begins November 15, safely after elections. For Obamacare’s champions in the media, the data is sound enough and the verdict is in: the thing is a success, no need to pay attention to the details anymore.
Come to think of it, that’s what the administration and its allies in Congress have been saying ever since they passed the law in 2010. And here we are.