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April 4, 2018

New CMS Report on Obamacare: ACA Failing, in a Death Spiral

  Institute for Policy Innovation

DALLAS – A new report from the Centers for Medicare and Medicaid Services (CMS) paints a bleak picture of Obamacare’s 2018 health insurance exchange enrollment.

Calling the CMS report “excellent” and “detailed,” Institute for Policy Innovation (IPI) resident scholar Merrill Matthews, Ph.D., issued the following statement, noting four key observations.

Matthews said:

  • “11.8 million are enrolled through the federal and state exchanges, down from 12.2 million in 2017 and 12.7 million in 2016, which marked the peak for exchange enrollment. Note that these numbers are the high point for the year. Historically, roughly between 25% and 50% would drop individual coverage during the year. The dropout rate for Obamacare is likely much smaller because taxpayers are funding on average 86% of the premium for 83% of enrollees. The Obama administration thought that perhaps 25 million to 30 million individuals would join the exchanges, demonstrating, once again, how little they understood insurance markets before they tried to reinvent them.
  • The percentage of younger participants (age 18-34) continues to decline while the percentage of older participants (55+) continues to rise. This is what insurers call the ‘death spiral’—young people flee higher premiums, so the pool gets sicker and more expensive—and many of us predicted it even before Obamacare began in 2014.
  • Monthly premiums for those on the federal exchange rose by 30%.  For context, the Department of Health and Human Services warned insurers in 2013 that they would be closely scrutinized if they requested an annual premium increase of 10% or more.  That 30% increase will likely drive even more young people out of the exchanges.  
  • Finally, these latest numbers demonstrate what a complete and disruptive failure Obamacare has been. Remember that the health insurance exchanges were supposed to be the genius part of the law, creating a great new health insurance marketplace, with competition, quality coverage and low premiums—and prove how much better the government was at creating markets than the private sector.”

“The exchanges have imploded, insurers have fled, and many have only one insurance option,” said Matthews. “It can be very difficult to find a doctor, and in many cases a hospital, willing to take Obamacare. Tens of millions of Americans have had policies with which they were happy canceled. And Americans have never paid so much for such bad coverage. The only thing that keeps Obamacare from collapsing completely is that taxpayers are paying most or all of the premiums of the vast majority of people in the exchanges.”

 

 The Institute for Policy Innovation (IPI) is an independent, nonprofit public policy organization based in Dallas. IPI resident scholar Dr. Merrill Matthews is available for interview by contacting Erin Humiston at (972) 874-5139, or erin@ipi.org

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