Six years into Obamacare and almost three years into the exchanges, we’ve learned a lot.
First lesson: management is important. Not to beat a dead horse, but Healthcare.gov’s disastrous launch was due partly to the website’s complexity, partly to an awful federal procurement system, and, last but not least, partly to a lack of adequate management capability in the administration.
Not to undersell everything else that went wrong, but former Obama advisor and Harvard health economist David Cutler made it clear in a letter to the administration, noting that “[t]he person newly appointed to head the insurance oversight office has a reputation as an insurance bulldog, not a skilled facilitator.” And an investigation by the Department of Health and Human Services’ inspector general concluded that “the absence of clear leadership … caused delays in decision-making, lack of clarity in project tasks, and the inability of CMS to recognize the magnitude of problems as the project deteriorated.”
Second lesson: Establishing an insurance company is more than just paying claims. The failure of more than half of all co-op insurers around the country — non-profit insurers that were given federal grants to compete in the exchanges — underscores this immensely well. Of course, these companies failed for a variety of reasons, including Republicans pulling the rug out from under them by changing the rules of the road for an important federal backstop. The point here is that wanting to create competition in insurance markets is all well and good, but it requires more than just throwing money at the problem.
The last lesson is perhaps the most relevant: People don’t want to spend a lot of money on insurance. Consider that in 2015, only about 28 percent of exchange-eligible individuals in states using Healthcare.gov enrolled in coverage. Even among those receiving significant subsidies, people falling between 100 and 250 percent of the federal poverty line, takeup was just about half.
You can see this play out more broadly by examining overall enrollment in the exchanges. From last March to the end of this most recent enrollment cycle, enrollment on the exchanges bumped up only by about one million, or about 8.5 percent, to 12.7 million. By comparison, last year, CBO projected that in 2016, we’d see 21 million individuals on the exchanges — a near doubling year over year.
Perhaps the uninsured simply found other sources of coverage? That’s unlikely, as Gallup most recently reported that the uninsured rate is mostly unchanged in 2015.
Instead, the likely culprit is that the insurance coverage on the exchanges is simply too expensive for what it offers consumers. It’s not hard to see why coverage that might cost $200 a month and comes with a $4,000 deductible might not be very attractive.
Despite moral objections on the left to skimpy insurance coverage, that might be exactly what’s needed to fulfill the ACA’s “universal coverage” goal. Though many will balk, conservative reformers should push the idea of a “copper plan” on the exchanges: Insurance that covers on average about 50 percent of expenses. This can be an opportunity to implement other changes to the law (that outright “repeal and replace” makes politically impossible) and may be a way to get some of the stragglers onboard. Other ideas, including plans that use reference-pricing and tiered networks (these are effectively banned on California’s exchange, for instance), should be encouraged.
After six years and counting into Obamacare, and the lessons for critics and supporters have (hopefully) been taken to heart. We’re still far away from learning how to make insurance attractive and affordable to those who need it most.
Yevgeniy Feyman is fellow and deputy director of health policy at the Manhattan Institute. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
