The Real Story on Who Got Obamacare Coverage and Its Cost

The Real Story on Who Got Obamacare Coverage

Obamacare’s Effects on Health Insurance, Explained in One Infographic

      We now have the Medicaid and private-market health insurance enrollment data for the second quarter of 2014 needed to complete the picture of how Obamacare’s rollout affected coverage.

     What we’ve learned is that the Obamacare gains in coverage were largely a result of the Medicaid expansion and that most of the gain in private coverage through the government exchanges was offset by a decline in employer-based coverage. In other words, it is likely that most of the people who got coverage through the exchanges were already insured.

     The second quarter data captures enrollments that occurred during the last two months of the open enrollment period, or which were otherwise delayed due to the numerous problems experienced by the exchanges, and so did not take effect until after the end of the first quarter.

     Our analysis of the data is reported in more detail in our latest paper, but our key findings are that in the first half of 2014:

Enrollment in individual-market plans (both on and off the exchanges) increased by 6,254,564 individuals.
Enrollment in private employer-sponsored group plans declined by 3,788,978 individuals.
In the states implementing the Obamacare Medicaid expansion, enrollment in Medicaid grew by 5,716,977 individuals.
In the states not implementing the Obamacare Medicaid expansion, enrollment in Medicaid grew by 355,674 individuals.

     Applying a little arithmetic to those four key data points yields the following observations:

The drop in employment-based coverage offset 61 percent of the gains in individual-market coverage, for a net increase in private-sector coverage of 2,465,586 individuals.
Total Medicaid enrollment increased by 6,072,651 individuals, with 94 percent of that growth occurring in the states that adopted the Obamacare Medicaid expansion.
The total, net increase in health insurance coverage (private-market and Medicaid combined) during the first half of 2014 was 8,538,237 individuals, but 71 percent of that coverage gain was attributable to Obamacare expanding Medicaid to able-bodied, working-age adults
When it comes to covering the uninsured, Obamacare so far is mainly a simple expansion of Medicaid.

     Thus, while most of the attention this year focused on the new health insurance exchanges, the data indicate that a significant share of exchange enrollments were likely the result of a substitution effect—meaning that most of those who enrolled in new coverage through the exchanges already had coverage through an individual-market or employer-group plan.

     Given that increased enrollment in Medicaid accounted for 71 percent of the net growth in health insurance coverage during the first half of 2014, the inescapable conclusion is that, at least when it comes to covering the uninsured, Obamacare so far is mainly a simple expansion of Medicaid.

The 2015 exchange open enrollment period is scheduled to start less than a month from now (on Nov. 15), while enrollment in state Medicaid programs occurs year round. When the resulting enrollment data for the next phase of Obamacare become available it will be interesting to learn:

The share of 2015 exchange enrollments that represent new applicants, as opposed to reenrollments by individuals who obtained exchange coverage in 2014;
Whether the number of Americans with individual market coverage continues to grow, and whether the number of those with private employer-group coverage continues to decline; and
If expanding Medicaid to able-bodied, working-age adults continues to be the principal source of coverage growth under Obamacare.

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Infographic by Kelsey Harris

ObamaCare’s Failing Cost Control

Oct. 20, 2014
The law’s ‘accountable care’ experiment is a bust so far.

     A major claim of ObamaCare’s political salesmen is that it will reduce U.S. health spending. The heart of this claim is the Accountable Care Organization, or ACO, but already evidence is accumulating that it isn’t working.

     That’s the news in the recent Health and Human Services release of the results from the first two years of ACO experience under the Affordable Care Act. The much-delayed data received zero media notice despite a speech from HHS Secretary Sylvia Mathews Burwell citing “evidence that we have bent the cost curve.” The data show the opposite.

ACOs were supposed to be a new paradigm for health care, with hospitals, primary care physicians and specialists working in teams to be more efficient and coordinate patient treatment across providers. In 2011 HHS introduced this business model as a new federal regulation, so providers that reduce spending according to a formula are paid a bonus that is a portion of the savings. If participants boost spending over this benchmark, they pay a penalty.

The Medicare “Pioneer” ACO project originally featured 32 experienced health systems hand-selected by HHS because they had already made progress toward the ACO model. Thirteen—or one-third of the program—have since dropped out as they spent more than the old status quo.

In year one, spending increased at 14 sites and only 13 of the 32 qualified for a bonus. In year two, spending increased at six of the remaining 23 and 11 received a bonus. Spending did fall somewhat overall, driven by a few high-performance successes. After netting out the bonuses and penalties, the Pioneer ACOs saved taxpayers a grand total of $17.89 million in 2012 and $43.36 million in 2013. All in, per capita spending was a mere 0.45% lower compared to ordinary fee for service Medicare.

Yet the upfront start-up investments for the pioneers (in administration, compliance and information technology) ran to $64 million, so at best the program is a wash. More to the point, the Medicare budget for 2013 was about $583 billion and these are supposed to be the most experienced providers. If most of them can’t succeed, what about the community hospitals that need the most improvement?

HHS runs a second ACO pilot for everybody else, with rewards but no penalties, called the Shared Savings program. Among those 114 ACOs, only 29 hit HHS’s financial targets in 2012. They saved $128 million and were paid $126 million in bonuses. In 2013, only 64 of 243 participants hit the targets.

Liberals are celebrating these disappointments as a victory for experimentation and “learning” about health-care delivery, but they haven’t learned anything. ACOs are failing because HHS’s regulations are a classic case of counterproductive and arbitrary central planning: The government is paying hospital groups to generate slightly lower bills. As the quitters may have discovered, it is more remunerative to stay with the old system, with higher hospital bills but no bonuses.

In particular, HHS also refused to involve seniors or give them any reason to choose ACOs over other providers. An inscrutable Medicare algorithm called a “prospective-retrospective attribution model” assigns patients to an ACO, even if they later leave the group or seek additional care from outside providers.

So patients often never know they are being treated by a given ACO and spending is then attributed (or not) that the ACO was or was not responsible for. Such turnover, or “leakage,” runs as high as 40% annually. Since the ACOs cannot accurately know which patients belong to their organization, they cannot understand how they are performing in real time or the standards to which they will eventually be held.

Notably, the integrated health systems that ACOs are supposed to recreate—Mayo Clinic, Geisinger, Kaiser Permanente and the rest—refused to become pioneers when the ACO regulations first appeared. HHS is now revising those regulations for next year. In comments to the agency this year, Mayo wrote that both ACO programs “are still too complex in their structure and requirements. They are excessively detailed and restrictive in ways that have significantly limited the number of interested groups.”

A better alternative would give patients the incentive and usable information about prices and value a la Paul Ryan’s defined-contribution Medicare reform. Doctors and hospitals will quickly adapt to compete for their business. That might mean ACOs or something else.

Mandating a new industry business model through the Federal Register was never likely to amount to much, however well meaning. But the rolling collapse of this ObamaCare ambition is more troubling for what it says about the future of U.S. health care.

If the ACO goes the way of every other previous HHS adventure in false omniscience, government planners will invariably turn to rationing care. Their main tool will be the Independent Payment Advisory Board, a 15-member committee of experts whose decisions are insulated from political oversight. Under ObamaCare, medicine will always be accountable to government, not patients.

71% of Obamacare Signups Traced to Government’s Expansion of Medicaid
Melissa Quinn
October 22, 2014

The vast majority of Americans gaining health coverage under Obamacare actually qualified for Medicaid because of loosened eligibility —and that’s what boosted enrollment among those previously uninsured, according to a new report from The Heritage Foundation.

The Obama administration has boasted that the Affordable Care Act, popularly known as Obamacare, would allow those previously uninsured to purchase quality, affordable health care.

“The inescapable conclusion is that, when it comes to covering the uninsured, Obamacare so far is an expansion of Medicaid,” Heritage Foundation health policy experts Edmund F. Haislmaier and Drew Gonshorowski write in a research paper scheduled for release today.

Officials announced in May that more than 8 million Americans had picked a health plan on the Obamacare website, HealthCare.gov.

Haislmaier and Gonshorowski conclude that 8.5 million Americans gained coverage through Obamacare from January to July.

However, their paper says, more than 70 percent of those signups can be traced to the expansion of Medicaid eligibility in 24 states:

Of the 8.5 million total individuals who gained health insurance coverage, 71 percent of that net coverage gain was attributable to Obamacare’s expansion of Medicaid to able-bodied, working-age adults.

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Infographic by Kelsey Harris

In the states that adopted and implemented Medicaid expansion under Obamacare, enrollment skyrocketed as an additional 5.7 million Americans signed up for coverage.

In 21 states opting out of Medicaid expansion, however, enrollment was strikingly lower. The Heritage report finds that 355,674 Americans signed up for Medicaid in those states.

In all, Medicaid enrollment increased by 6 million individuals for the first half of 2014.

The Affordable Care Act, popularly known as Obamacare, loosened eligibility requirements for Medicaid, traditionally the government’s health program for the poor. The changes made it easier for individuals with an income of up to 138 percent of the federal poverty line (roughly $16,000) to qualify for the taxpayer-funded health coverage.

Obamacare Will Add $131 Billion to Federal Deficits in Next Decade

     As the Heritage experts note, many Medicaid-eligible Americans under the new requirements also don’t have dependent children.

     States got an incentive–federal dollars–to adopt the requirements.

Twenty-seven states and the District of Columbia opted to expand Medicaid. By July, however, 24 states had implemented the program.

The Affordable Care Act went into effect in October. Its implementation included the rollout of HealthCare.gov, the online marketplace where consumers can peruse and purchase insurance plans.

HealthCare.gov’s advent was accompanied by well-publicized malfunctions, glitches and failures. White House officials scrambled to fix the website as consumers experienced long delays. As a result, the Obama administration extended the close of open enrollment from March 30 until April 15.

Despite the rocky rollout of HealthCare.gov, President Obama and then-Health and Human Services Secretary Kathleen Sebelius touted that enrollment in Obamacare insurance plans topped the original goal of 7 million.

According to reports from the Department of Health and Human Services, enrollment likely hovered around 7.3 million, as original estimates took into account those who selected a plan, but did not pay their first month’s premiums.

Sylvia Mathews Burwell, who in June replaced Sebelius as HHS secretary, said in a speech last month at the Brookings Institute:

     Four years after President Obama signed the law, middle class families have more security, and many who already had insurance have better coverage. Fewer Americans are uninsured, and at the same time, we’re spending our health care dollars more wisely, and we’re starting to receive higher quality care.

The Daily Signal is the multimedia news organization of The Heritage Foundation.

Obamacare Will Add $131 Billion to Federal Deficits in Next Decade
Robert Moffit
October 14, 2014

     Among President Obama’s many high-profile health care promises, there is this gem from his 2009 address to Congress: “I will not sign a plan that adds one dime to our deficits–either now or in the future.”

     But according to staff on Senate Budget Committee, those dimes are starting to pile up. The Senate staff report says that the Affordable Care Act will add $131 billion to the federal deficits over the period 2015 to 2024.

In brief, the Republican Senate Budget Committee staff say that, based on an extrapolation from the July 2012 estimate of the Congressional Budget Office (CBO), the projected ACA contribution to deficit reduction would amount to $180 billion over the period 2015 to 2024. Positive factors, based on CBO analyses, contribute to that portion of the ten-year deficit reduction.

For example, the implementation of the health insurance coverage provisions of the law, as CBO estimated in April of 2014, improves the overall deficit outlook because the 10-year cost of those provisions (reflecting, among other things, narrower networks of doctors and hospitals) is now estimated to be $83 billion less than what CBO projected in 2012. Score one for a deficit decrease.

But, the Republican Senate Budget Committee staff, who report to Sen. Jeff Sessions, R-Ala., also note, certain other intervening factors interrupt this progress toward fiscal rectitude. Over the period 2007 to 2010, before the implementation of the Affordable Care Act, CBO found that Medicare spending growth per capita was 3.8 percent, compared to 7.1 percent over the period 2000 to 2005.

Nonetheless, CBO’s baseline projections of higher health care savings was based on the assumption that Medicare and Medicaid spending would also be higher and thus the savings from a slowdown in that spending would thus be greater. In fact, however, Medicare and Medicaid spending was even lower than originally anticipated; the CBO baseline changed, and thus the expected health care savings are now projected to be lower–by as much as $132 billion. So, score one for a deficit increase.

The Republican Senate Budget Committee staff then examined the impact of the ACA’s tax provisions on the labor force. In 2014, CBO reported that the law would reduce the total number of hours worked in and thus reduce the total labor compensation by 1 percent by 2024, including taxable income. Based on the labor force data, the staff estimated that the total federal revenue loss over the period 2017 to 2024 would amount to a net $262 billion. Score two for a deficit increase.

Bottom line: Reconciling the data, the Republican Senate Budget Committee staff report thus concludes that over the period 2015 to 2024, the deficit would increase by $131 billion.

Of course, this, or any other such calculation, is dependent upon certain assumptions, variables or future policy changes. It’s a tough, often thankless, job. Like that of the CBO, the Senate Budget Committee staff estimate is thus held hostage to a multiplicity of factors that they cannot control or foresee. In June 2014, the CBO, which had previously forecast the health law’s contribution to deficit reduction, announced that, amidst various administrative changes and shifting baselines, it would not estimate the ACA’s budget effects.

So, the Senate Budget Committee Republican staff is going where CBO will not tread. For that reason, these Senate Budget Committee analysts are making a valuable contribution to the ongoing national debate over the Affordable Care Act. Not only is their work based on the CBO’s widely published data, they have made their assumptions and their methodology crystal clear, and thus easy to replicate or refute. That’s the beauty of their work. It should invite honest debate–in and out of Congress.

And, yes, it’s time for another congressional oversight hearing.

California Politician Claims Obamacare Contracts Went to Agency Director’s Cronies