Commentary: Don’t Blame Trump for Lower Health Insurance Signups. Blame Obamacare.
Obamacare’s fifth open enrollment period ended Friday. In the 39 states using the federal HealthCare.gov insurance exchange, 4.7 million people signed up for 2018 coverage, as of Dec. 9. At this point, that’s about 4.5 million fewer people who signed up than last year.
This year’s lower numbers shouldn’t be surprising. Those who logged onto HealthCare.gov found fewer options and higher premiums. Obamacare’s incoherent mandates—not the Trump administration—deserve the blame for this year’s stunted enrollment.
Obamacare’s proponents allege that President Trump “sabotaged” the exchanges. They’re referring to the Trump administration’s decision to shorten the open enrollment period—from three months last year to 45 days this year—and cut Obamacare’s advertising budget from $100 million to $10 million.
Accusations of sabotage don’t hold up under scrutiny. For starters, Obamacare’s advertising budget was a waste of money.
Consider one marketing initiative from last year’s open enrollment period, the Enrollment Assistance Program. Despite spending $22.4 million encouraging patients to sign up for coverage, the program enrolled just 14,500 people. That amounts to $1,545 per enrollee.
Further, the shorter open enrollment period has actually accelerated the pace of signups. Through mid-December 2017, more people had enrolled compared to the same period last year.
Look at California, one of the few states that operates its own exchange. This month, Covered California reported more than 100,000 new enrollees and 1.2 million renewals within the first month of open enrollment. Compared to last year, that’s a 28% increase.
The people motivated to get exchange coverage are clearly doing so. But that number is smaller than it was last year. And that’s because exchange coverage has grown costlier each and every year, thanks to Obamacare.
For an ever greater number of people, exchange coverage just isn’t worth the price. Premiums for mid-level “silver” plans have risen by an average of 34% nationwide, according to an analysis from the consulting firm Avalere.
Enrollees in many states faced even larger increases. Iowans are paying 69% more for silver plans in 2018. Shoppers in Wyoming, Utah, and Virginia who picked silver plans are paying 65%, 64%, and 61% more, respectively.
The 2018 open enrollment season was not the first time shoppers encountered steep rate hikes. Average rates rose 25% in 2017. Since 2013, the price of an individual plan has almost doubled.
Two of Obamacare’s mandates in particular deserve blame. “Guaranteed issue” prohibits insurers from denying coverage to enrollees based on their health status or history. “Community rating” bars insurers from charging sick enrollees more than healthy ones or from charging old people any more than three times what they charge the young.
These mandates create a perverse incentive for people to wait until they get sick to purchase coverage and ensure that the exchange pool will be disproportionately composed of high-cost individuals.
So insurers have hemorrhaged cash. Aetna (AET) lost $700 million between 2014 and 2016. The company expects to lose another $200 million by the end of the year. In October, CareFirst BlueCross BlueShield projected that it would lose more than $600 million by the end of 2017 on its exchange business. Nineteen of the 23 non-profit “co-op” insurers established by Obamacare have collapsed.
All those losses have driven insurers from the marketplaces. UnitedHealth Group (UNH), the nation’s largest private insurer, only sold exchange plans in 2017 in three states, down from 34 in 2016. Humana offered coverage in 11 state exchanges last July. In 2018, it pulled out of the exchanges entirely.
These exits left patients with fewer coverage options. Nearly half of all counties nationwide had only a single exchange insurer to choose from for 2018.
The Trump administration may make for a convenient scapegoat for the exchanges’ declining enrollment. In reality, fewer people are buying insurance because it’s too expensive. And Obamacare itself brought about that outcome.
Sally C. Pipes is president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The Way Out of Obamacare (Encounter 2016). Follow her on Twitter @sallypipes.