The Obama administration has tried to put the best face on Obamacare, touting statistics about how many people have signed up for the program. Yesterday the Department of Health and Human Services issued a report that projects ACA enrollments on the individual exchanges in 2015. Many news outlets have reported that HHS scales down the enrollment estimate that the Congressional Budget Office produced in April. This is true, but it is not the real story. Rather, the most newsworthy point is how minimal Obamacare’s net impact on the uninsured really is.
Yesterday’s HHS report projects that total enrollment on the ACA exchanges in 2015 will be 9.0 to 9.9 million. This compares with 7.1 million as of October 2014, a gain of only 2.4 million (using 9.5 million as the midpoint of the HHS estimate). This paragraph, in which the report calculates the “addressable market” for Obamacare, is revealing:
Recent CMS data indicate that as of October 2014, approximately 7.1 million people have effectuated coverage through the Marketplace. According to the multiple information sources listed above, there are approximately 32 million uninsured Americans – approximately one-quarter fewer than before the ACA’s coverage expansion began; 17 million of them were subtracted from this total because they are likely to be eligible for Medicaid. This means that an estimated 15 million are eligible to purchase a Qualified Health Plan (QHP) through the Marketplace. There are 8 to 12 million people with individual off-Marketplace coverage. The estimated total addressable market for new enrollment – those who might elect to buy policies through the Marketplace – consists of approximately 23 to 27 million people.
So according to HHS, the total number of uninsured Americans not already eligible for Medicaid is 15 million, a far lower figure than those one usually hears. The 9.5 million ACA enrollees projected by HHS come from three sources. The first is re-enrollments of those who already have insurance through the exchanges. HHS projects a re-enrollment rate of 83%, which means that 5.9 million of the 9.5 million are already signed up. This leaves 3.6 million to come either from the ranks of the uninsured or from those who already have private policies.
At this point the report becomes opaque. The exact arithmetic is not disclosed, but HHS says that there will be “three or four previously uninsured new enrollees for each new enrollee drawn from the ranks of those who previously had off-Marketplace individual coverage.” Again using the midpoint of the estimate, a ratio of 3.5:1, this means that the of 3.6 million new enrollees, 2.8 million were previously uninsured. That is less than 19% of the current 15 million uninsured, not much of a dent given that for two years now, buying health insurance has ostensibly been mandatory.
But the reality is worse. The report does not tell us what will happen to the 17%, or 1.2 million, who do not re-enroll in the exchanges this year. Some of these, an unknown number, undoubtedly will revert to being uninsured. So the net reduction in the uninsured is less than 2.8 million.
But this point is more important: the HHS report never addresses why those who will enroll in Obamacare for 2015 are uninsured. 2015 is the year when the employer mandate begins to take effect (it is phased in over several years, depending on the size of the employer). As the mandate takes effect, many employers will either lay off workers or reduce their hours below 30 per week so that they are not eligible for health insurance, or they will terminate their plans altogether. All of the employees who thus lose their insurance because of Obamacare will be counted by HHS as previously uninsured, and the administration–giving with one hand what it took away with the other–will take credit for providing them health insurance at public expense.
At this point, we have no idea how many will lose their employer-sponsored coverage in 2015 because of Obamacare, and it is unclear what assumption, if any, HHS made. It is safe to say, however, that a considerable number of the less-than-2.8 million new Marketplace signups will be in this category. So the net effect of the ACA in reducing the ranks of the uninsured–the statute’s purported justification–is surprisingly small, especially when compared with the law’s $120 billion annual price tag.
I have uploaded the HHS report so you can read it for yourself and check my calculations: