Hold the Applause, Biden Shouldn’t Take an Obamacare Victory Lap
President Joe Biden has finally figured out how to get Americans onto the Obamacare exchanges — by paying them.
The administration recently congratulated itself after 2.5 million Americans signed up for plans through the government-run marketplaces during a newly created Special Enrollment Period that closed August 15.
But these figures don’t reflect newfound enthusiasm for Obamacare.
The numbers are the result of more generous federal subsidies enacted in April as part of the American Rescue Plan Act.
Through next year, those who make more than 400% of the poverty level, or $51,520 for an individual, will not have to pay any more than 8.5% of income for coverage.
For those who make less than 400% of poverty, the federal government will pick up a bigger share of the premium than it did under the Obamacare status quo.
On its face, boosting exchange enrollment might seem like a public-policy success.
But what has been stopping those millions of Americans from signing up for exchange coverage all of these years?
The answer is that the marketplaces offer coverage that patients either don’t value or can’t afford. Biden’s solution — essentially paying more people more money to buy exchange coverage — ignores the first problem and puts a Band-Aid over the second one.
Consider the problem of quality.
A recent survey by the Kaiser Family Foundation found that 4.5 million uninsured Americans currently qualify for a zero-premium exchange plan and have decided not enroll.
That suggests there are serious flaws with marketplace policies that go far beyond their high premiums. Many feature high deductibles and narrow provider networks.
People may not see the point of enrolling in exchange coverage if they can’t afford to put it to use or can’t find a doctor who will see them.
Boosting premium tax credits will do nothing to address these shortcomings.
Nor will these giveaways attack the root causes of high exchange premiums — namely, Obamacare’s insurance market regulations.
These rules require insurers to sell coverage to all who apply, regardless of health status or history. They also forbid insurers from charging older people any more than three times what they charge younger ones.
And they mandate that all policies cover a suite of ten essential benefits, even if a customer doesn’t want or need them.
President Biden and congressional Democrats have no intention of rethinking these mandates. Boosting exchange enrollment is their lone goal.
If they throw enough federal money at potential enrollees and give them long enough to sign up, they can goose those enrollment numbers in their favor — and declare political victory.
And now Democrats want to keep up this charade by making the enhanced subsidies permanent, as part of their $3.5 trillion budget reconciliation bill.
The estimated cost to taxpayers? Some $200 billion.
Sure, Democrats can brand that $200 billion as aid to ordinary Americans. But the real beneficiaries are insurers, who receive the enhanced premium subsidies directly.
There’s no denying Biden has found a way to increase exchange enrollment.
But paying people to purchase coverage they weren’t all that enthusiastic about before — and might not be able to afford without the federal government’s largesse — is hardly an achievement.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All,” (Encounter 2020). Follow her on Twitter @sallypipes. Read Sally Pipes’ Reports — More Here.
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