Obamacare Exchanges Are Scarcely Impacting the Uninsured

Most observers have tried to judge Obamacare’s progress on how many people have signed up on the federal and state exchanges. The administration, likewise, has tried to define “success” in terms of how many people have registered–a moving target, of course, as exchanges have proved unworkable and numbers have been lower than expected.

But this entire approach is deeply flawed. Having a lot of people sign up for insurance on an Obamacare exchange may be a good thing, or it may be a bad thing. If people are buying insurance on an exchange because their employers terminated their coverage on account of Obamacare, that’s a bad thing. If people signing up already had insurance, but lost it because of Obamacare, that’s a bad thing too. So the real question is, how many people are enrolling on the exchanges who didn’t already have health insurance, or would have had it but for Obamacare?

That breakdown has always been something of a mystery, but the Washington Post reports that recent surveys suggest that the number who are becoming insured because of Obamacare may be vanishingly small:

The new health insurance marketplaces appear to be making little headway so far in signing up Americans who lack health insurance, the Affordable Care Act’s central goal.

A pair of surveys released on Thursday suggest that just one in 10 uninsured people who qualify for private health plans through the new marketplace have signed up for one….

One of the surveys, by the consulting firm McKinsey & Co., shows that, of people who had signed up for coverage through the marketplaces by last month, just one-fourth described themselves as having been without insurance for most of the past year.

So if the point of Obamacare is to reduce the number of uninsured, it is a dismal failure. But the story gets worse. Of the small number of previously uninsured who have registered, an even smaller number have actually paid a premium so as to buy insurance:

[T]he survey show[s], that just over half of uninsured people said they had started to pay, compared with nearly nine in 10 of those signing up on the exchanges who said they were simply switching from one health plan to another.

So at this point, Obamacare looks like a ridiculously expensive way to provide health insurance for a tiny number of people.

Of course, this whole situation is very odd. The basic idea underlying Obamacare is that tens of millions of people don’t have health insurance because they can’t afford it. As a result, we all wind up paying for their health care via emergency rooms and so on. Moreover, because the uninsured forgo preventive care, the bills are ultimately larger than if they had been provided with health insurance in the first place. (All of these propositions are debatable, of course.) So Obamacare’s solution is to subsidize the purchase of health insurance by the uninsured. Now they will be able to afford it, because the rest of us will be footing the bill–a smaller bill, the theory goes, than if we were paying for their emergency room treatment or for the consequences of a lack of preventive care.

On paper, that sounds like an attractive proposition. So why isn’t it working? A part of the answer, undoubtedly, is that people’s decisions about buying health insurance are not so simple. The idea that anyone who can afford insurance would certainly buy it, and therefore those who don’t have coverage can’t afford it, is wrong. From there, the conversation gets complicated. That is a subject for another day. For now, let’s just note that to date, Obamacare is a far worse flop than has generally been reported.

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