Across America, millions of people have been forced out of health insurance which they chose and with which they were satisfied, and have been forced onto the government-sponsored Obamacare exchanges. That process is barely beginning; the second and third waves of lost insurance will occur when administratively-imposed delays in the application of Obamacare to small group and employer-sponsored policies finally expire. But already, many have spoken out about the higher costs they are incurring under Obamacare, and a few have appeared in television commercials to talk about their personal experiences.
The best-known of these opponents of Obamacare is Julie Boonstra, whom we wrote about here, here and here. Mrs. Boonstra appeared in an ad created by Americans For Prosperity that has aired in Michigan, where Obamacare supporter Gary Peters is running for the Senate. The Democrats immediately struck back. Harry Reid, among others, called Mrs. Boonstra a liar, and the Obama administration’s lawyers wrote to Michigan television stations, threatening to have the FCC pull their licenses if they ran the AFP ad.
The Democrats’ claim is that Mrs. Boonstra’s Obamacare policy is almost as good as the one she was forced out of by the Affordable Care Act, and she should stop complaining. Their argument misses the mark for several reasons, but this is the point I want to make: the Democrats argue that the net cost of Mrs. Boonstra’s policy for the current year, 2014, is almost the same as the policy that she had before. I think that is essentially correct, although it does not address other issues raised by her, nor does it justify the Democrats’ lying to her, and destroying the insurance that she already had, with which she was happy. But does the Democrats’ claim have any plausibility beyond 2014?
Insurance companies set premiums based on experience. When they lack experience, as with Obamacare, they make assumptions. One assumption that carriers used in setting 2014 premiums was that a bailout would be available if premiums turn out to be too low. The law establishes “risk corridors” for individual and small group insurance, under which the government will reimburse insurance companies’ losses, up to a point. The risk corridors encourage insurers to quote lower premiums, since they are protected (again, up to a point) by the federal government. But the risk corridor provisions of the act expire in 2016.
Even more fundamental is the composition of the risk pool in the Obamacare exchanges. The economics of Obamacare, and therefore the premiums charged by insurers, depend entirely on how healthy or sick the people who enroll in Obamacare turn out to be. The Obama administration made projections on this subject, as did the insurers. I don’t think there is any doubt about the fact that actual enrollments in the exchanges have been disappointing from this standpoint. There are nowhere near as many young, healthy people signing up as will be required to make the system work. This is why the Obama administration has embarrassed itself in trying to recruit young people into the program, with Pajama Boy, Obama’s pathetic “Between Two Ferns” interview, Angry Mom, and so on. What this means is that once the insurance companies are able to set premiums based on actual experience, as opposed to rosy projections, those premiums inevitably will rise due to the risk pool being lower-quality than predicted.
It is no surprise, given these facts, that for some people, insurance available on the exchanges for 2014 costs about as much as the insurance that was available prior to passage of the Affordable Care Act. But, as baseball players say: wait ’til next year. When Mrs. Boonstra gets her premium notice toward the end of 2014, or again in 2015, it is likely to be far higher than what she is paying now, or what she paid before the Democrats drove her out of the coverage she already had. At that point, let’s see Harry Reid call her a liar. If she is still living, that is; she suffers from leukemia and is fighting for her life. On top of that battle, she shouldn’t have to worry about the ins and outs of a 1,500 page statute that literally no one read until after the Democrats passed it, thereby destroying the health insurance coverage that Mrs. Boonstra and millions of other Americans had.