Affordable Care Act (ACA) health insurance plans drew in two million new enrollees after the Centers for Medicare and Medicaid Services (CMS) extended the enrollment period and offered subsidies to higher-income households.
On March 23, the Centers for Medicare & Medicaid Services extended the ACA special enrollment period by three months, to August 15. In addition, the March relief package offered two boosts to premium subsidies.
Enrollees now pay no more than 8.5 percent of their income toward coverage, down from nearly 10 percent. Lower-income policyholders can receive subsidies that eliminate their premiums completely.
Also, those earning more than 400 percent of the federal poverty level—about $51,000 for an individual and $104,800 for a family of four in 2021—are now eligible for help for the first time.
Rewarding Gamers
The changes reward the wrong people, says Devon Herrick, an independent health economist.
“Biden’s attempt to expand Obamacare will mostly attract those who have skated by without health insurance, and it will now reward their gaming the system,” Herrick said. “In addition, rather than aid individuals, it will probably help health insurers.”
Obamacare plans must rate every enrollee the same and cannot turn down anyone for joining the plans while sick. The rules encourage people to refrain from signing up for insurance until they face medical bills. Additionally, the subsidies go directly to the insurers, which shields consumers from premium increases and gives insurers little reason to create value.
The changes do nothing to address the fact that most Americans did not want and do not need the program and have either lost the plans they had under their employer or can no longer see the same doctors, a caveat former President Barack Obama promised would never happen while he campaigned for the ACA, which ultimately passed without a single Republican vote supporting it.
Inferior to Employer Coverage
Many of the people who signed up for Obamacare insurance had better coverage at their previous job, says John C. Goodman, president of the Goodman Institute for Public Policy Research and co-publisher of Health Care News.
“Obamacare deductibles are more than twice the size of deductibles in a typical employer’s plan, and Obamacare networks often leave out the best doctors and the best hospitals,” Goodman said.
In Goodman’s latest book on the issue, New Way to Care, the author says the system creates an incentive for insurers to discourage the costliest people from enrolling, because they can’t charge insurance prices based on risk, and one method insurers deploy to keep people away is to narrow their coverage networks.
One solution would be to expand choice outside the Obamacare exchanges and give employees more freedom in choosing what health plan works best for them, says Goodman.
“Using the power of executive order, the Trump administration allowed employers to buy insurance for their employees that is portable, traveling with them from job to job and in and out of the labor market,” Goodman said. “We should encourage this practice, and we should let people who take an employer plan with them have the same tax subsidy we now give to people who enroll in Obamacare.”
Chasing Government Money
Obamacare was supposed to encourage more people to buy health insurance and thus widen the pool with healthy people to help offset the cost of the neediest enrollees. Instead, premiums soared, and those with the fewest claims dropped their insurance. In addition, states expanded eligibility for free care under Medicaid.
It is no surprise the lavish subsidy increases have attracted some people to go back to Obamacare, says Sally Pipes, the president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute.
“The Biden administration has stopped at nothing to entice more people to sign up for Obamacare,” Pipes said. “Given how much money Congress and the administration are spending to subsidize exchange coverage, it would be surprising if the administration weren’t setting enrollment records.”
Subsidies for the Wealthy
In some parts of the country, households making more than $500,000 a year can now receive government subsidies to help cover their health insurance premiums. The total cost to taxpayers of Biden’s enhanced exchange subsidies will be more than $34 billion through 2030.
Even so, the sum will fail to provide adequate access to quality care, says Pipes. Nearly three-quarters of the exchange plans have narrow provider networks, which means patients may not be able to visit their preferred doctors or hospitals.
“Instead of funneling more taxpayer money to try to obscure Obamacare’s failures, Congress and the Biden administration should focus on ensuring patients have the freedom to choose the health plan that best fits their needs and budget,” Pipes said. “That may be a short-term plan, which doesn’t have to abide by Obamacare’s cost-inflating regulations and so is typically much less expensive than an exchange plan, often for a comparable level of coverage.”
Kenneth Artz (kennethcharlesartz@gmx.com) writes from Dallas, Texas.