A CBO Full of Surprises: Obamacare Will Insure 2 Million Fewer in 2014

Obamacare will insure 2 million fewer people in 2014 than previously reported.  That number is in a new report just released by the Congressional Budget Office (CBO).

That may come as a surprise to you.  But it isn’t the biggest surprise in the report for me.  I’ll explain why later. 

First, let’s review the new numbers.

Last May, the CBO estimated that seven million people would sign up for insurance through exchanges this year.  That number is not a surprise – it has been reported widely in the media.

It also estimated that nine million previously uninsured people would be enrolled in Medicaid or CHIP.  In other words, a total of 16 million people would obtain coverage this year through Obamacare.

But last week, CBO released updated estimates.  It now says that only 6 million will sign up through the exchanges this year, and only 8 million will enroll in Medicaid or CHIP. 

Because some of the people who would have signed up are already insured, that means that the number of uninsured people will grow by 1 million over the CBO’s previous estimate.

Is that really a surprise?

It has been evident for some time that getting 7 million people to sign up for insurance through the exchanges was an ambitious target.  And the early glitches sure didn’t help.  But enrollments have been going much more smoothly lately, and reaching 6 million would still be impressive.

Also, taking into account the new enrollments in Medicaid and CHIP, the overall number of uninsured would still be reduced this year by 13 million.  That would reduce the total number of uninsured people from 58 million in 2013 to 45 million – halfway to Obamacare’s 2016 full-implementation target of 31 million.

That is still a pretty good result, and about what could have been expected.

And there is a little more good news on the fiscal side.  Lower enrollment numbers mean a little less spending for ACA each year, and in a program this big, that comes to $18 billion saved over ten years.

That would be enough to fund the prevention fund again, but I guess we shouldn’t go there.

So where’s the surprise?

The first is, of course, could be in the perception.  Much as the headline from the CBO report last week that Obamacare would cause the loss of over 2 million jobs was pretty surprising, another headline that it has fallen 2 million people short of its 2014 insured targets could be just as shocking. 

Of course, last week’s headline didn’t mention that the jobs “lost“ come about largely from among people who feel too sick to work, and who hold onto a job solely because they need the health insurance that comes with it.   The next headline may also not mention that the newly insured people also will come from among those who perceive that they need health insurance the most.

The second is also in the perception.  If Obamacare falls short of its targets, and those targets are recast as promises, then this will be perceived as another Obamacare promise broken.  People always seem surprised when they hear about politicians breaking promises, and they often make them pay at the polls.

But what may be the biggest surprise of all in the new numbers? 

It is this: that Obamacare is working almost exactly as it was intended, and appears to be having almost exactly the result that was intended. 

We are actually getting from the Affordable Care Act almost exactly what the President and Congress said we’d be getting way back in 2010.  And whether you like the law or not, this does suggest that members of Congress were a whole lot more knowledgeable about what they were voting for back in 2010 than most people give them credit for.

In other words, this law was put together out in the open.  The provisions in it were put together in a thoughtful way.  And those who made promises about what it would do were, in fact, telling the truth.  

And while a few of us may be surprised by how it has affected us personally, as a whole we all do know where we stand with this program.

I wish that were the case with all public policy initiatives. 

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

Supreme Court Ruling Against Individual Mandate Could Result in Care Denial to Poor

Opponents of the Affordable Care Act (ACA) are now looking to the Supreme Court to overturn the 2010 law before time runs out on them.

After ACA became law eighteen months ago, they were optimistic that they could beat back several of its key provisions.  These included the minimum medical loss ratios, the expansion of Medicaid, the health insurance exchanges, and the individual mandate.

A brief review of the current status of each shows why the individual mandate is the last one standing.  But as the arguments for and against it have crystallized in the Courts, they show how the Supreme Court could open a Pandora’s Box best left closed.

 Minimum loss ratios

ACA mandates that all private insurance plans will have to pay at least 80 to 85 cents in benefits for every premium dollar collected, or rebate the difference to policy holders beginning in 2012.  Opponents argued that many existing plans would be forced out of the market because of high administrative costs.

However, the federal government has approved several short-term waivers from the requirement, deflating opposition.  Also the Center for Medicare and Medicaid Services has told Florida that it must meet the 85% minimum loss ratio in its public Medicaid program, too.  Once private insurance rebates start to flow to consumers in 2012, the remaining opposition will likely melt away.

Medicaid Expansion

Beginning in 2014, everyone below 133% of poverty will be eligible for Medicaid.  The 26-state lawsuit against the ACA – the one most likely to be taken up by the Supreme Court this term – argued that the Medicaid expansion imposed an unconstitutional financial burden on the states.

But the Courts have already ruled against the states on this one, and so the Medicaid expansions will go forward in two years unless Congress changes the law.

Health Insurance Exchanges

Beginning in 2014 states will have to have exchanges through which consumers will purchase health insurance.  Only plans offering the minimum benefits mandated by ACA can be offered on the exchanges.  Some state regulators argued that they did not have the authority to enforce the “minimum benefit provisions” mandated by ACA.  Florida decided to establish its own exchange that will not meet the ACA requirements.

However, a dozen other states are already moving forward with their approved exchanges, undercutting “lack of state authority” argument and putting Florida out on a limb.   

The Individual Mandate

Beginning in 2014, a system of subsidies and penalties will go into effect to encourage people to purchase health insurance.  Those making up to 400% of poverty will receive subsidies for health insurance, but all those above 133% of poverty who refuse to purchase insurance will have to pay a federal income tax penalty.

The crux of the legal argument against the individual mandate is that it is unconstitutional for the Federal government to impose a tax penalty on an individual for refusing to purchase a consumer product.  However, opponents have conceded that it would be Constitutional to impose such a mandate at the time of service.

Judge Stanley Marcus, one of the judges who heard the appeal that may now go before the Supreme Court, made this clear in his dissent.

He wrote that “the plaintiffs and, indeed, the majority have conceded, as they must, that Congress has the commerce power to impose precisely the same mandate compelling the same class of uninsured individuals to obtain the same kind of insurance, or otherwise pay a penalty, as a necessary condition to receiving health care services, at the time the uninsured seek these services.”

So what the Supreme Court is being asked to decide is not “if” the individual mandate is constitutional, but “when.”

Some legal experts don’t think that there is much of a distinction in this. 

But if the Supreme Court feels differently, and ultimately decides that it is Constitutional to impose the tax at the time of service, but not in advance, then this may well open up a Pandora’s Box that we would all rather stay tightly closed and locked.

Even a narrow ruling against the “pre-tax” could have a far-reaching unintended consequence for indigent, uninsured people.  These people include many of the over 50 million uninsured people today and the 22 million who will still be uninsured after ACA implementation.  A Supreme Court ruling that holds that people could be forced to pay at the time of service could also be construed as permitting providers to deny care to those who cannot afford it.

Opponents hope that a Supreme Court ruling against “pre-taxing” will result in a political unraveling of the law. It could well happen, but not in the way they intended.

If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.