Tag Archives: Medicaid enrollment

The CBO’s Obamacare Fantasy Forecast

28 Tuesday Mar 2017

Posted by in Health Care, Obamacare

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The Congressional Budget Office (CBO) is still predicting strong future growth in the number of insured individuals under Obamacare, despite their past, drastic over-predictions for the exchange market and slim chances that the Affordable Care Act’s expansion of Medicaid will be adopted by additional states. Now that Republican leaders have backed away from an unpopular health care plan they’d hoped would pass the House and meet the Senate’s budget reconciliation rules, it will be interesting to see how the CBO’s predictions pan out. The “decremental” forecasts it made for the erstwhile American Health Care Act (AHCA) were based on its current Obamacare “baseline”. A figure cited often by critics of the GOP plan was that 24 million fewer individuals would be insured by 2026 than under the baseline.

It was fascinating to see many supporters of the AHCA accept this “forecast” uncritically. With the AHCA’s failure, however, we’ve been given an opportunity to witness the distortion in what would have been a CBO counterfactual. What a wonderful life! We’re stuck with Obamacare for the time being, but this glimpse into the CBO’s delusions will be one of several silver linings for me.

Again, the projected 24 million loss in the number of insured under the AHCA was based on an actual predicted loss of about 5 – 6 million and the absence of an Obamacare gain of 18 – 19 million. Those figures are from an excellent piece by Avik Roy in Forbes. I drew on that article extensively in my post on the AHCA prior to its demise. Here are some key points I raised then, which I’ve reworded slightly to put more emphasis on the Obamacare forecasts:

  1. The CBO has repeatedly erred by a large margin in its forecasts of Obamacare exchange enrollment, overestimating 2016 enrollment by over 100% as recently as 2014.
  2. The AHCA changes relative to Obamacare were taken from CBO’s 2016 forecast, which is likely to over-predict Obamacare enrollment on the exchanges by at least 7 million, according to Roy.
  3. The CBO also assumes that all states will opt to participate in expanded Medicaid under Obamacare going forward. That is highly unlikely, and Roy estimates its impact on the CBO’s forecast at about 3 million individuals.
  4. The CBO believes that the Obamacare individual mandate has encouraged millions to opt for insurance. Roy says that assumption accounts for as much as 9 million of total enrollment across the individual and employer markets, as well as Medicaid.

Thus, Roy believes the CBO’s estimate of the coverage loss of 24 million individuals under the AHCA was too high by about 19 million!

In truth, Obamacare will be watered down by regulatory and other changes instituted by the Trump Administration, which has said it will not enforce Obamacare’s individual mandate. Coverage under the “new” Obamacare will devolve quickly if the CBO is correct about the impact of the individual mandate.

The CBO’s job is to “score” proposed legislation relative to current law; traditionally, it made no attempt to account for dynamic effects that might arise from the changed incentives under a law. The results show it, and the Obamacare projections are no exception. In the case of Obamacare, however,  the CBO seems to have applied certain incentive effects selectively. The supporters of the AHCA might have helped their case by focusing on the flaws in the CBO’s baseline assumptions. We should keep that in mind in the future with respect to any future health care legislation, not to mention tax reform!

 

 

 

 

 

White House Spins Weak Obamacare Enrollments

24 Monday Aug 2015

Posted by in Markets, Obamacare

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obamacare-humor-Screw

The Obama Administration is trying desperately to burnish the record of the President’s signature “achievement”, the Affordable Care Act (ACA), a.k.a. Obamacare.  That’s a tall order, unless the subject is the ACA’s remarkable triumph for excellence in high cronyism. Otherwise, little wonder that they tell only part of the Obamacare story. Robert Laszewski recently examined ACA’s enrollment in more detail and found the record rather dismal. He notes the following:

“… the Obama administration is just reporting the good news and a good share of the press appears to be happy to pass these numbers along–albeit in a technically correct but hardly complete way.“

Here are two examples provided by Laszewski:

  • The Rand Corporation reported that a net total of 16.9 million people were newly enrolled through February 2015. This was picked up by the press, which attributed the increase to Obamacare. But only 4.1 million of those newly insured came from the individual marketplaces (as noted by Rand). Most of those eligible for coverage through the marketplaces have not enrolled. Most of those who have enrolled were qualified for subsidies. Another 6.5 million came from Medicaid, which is free to those who qualify for that program. 9.6 million came from employer-provided plans, which has much to do with improved hiring over the past two years, as opposed to the ACA.
  • There were almost 950,000 new enrollees during the “special enrollment period” (after open enrollments ended) this year. This was heralded by the media, but little was said about the 1.3 million who dropped off the Obamacare rolls by the end of March. That number will grow once the administration comes clean on the number who have dropped coverage since then.

From Laszewski:

“The Obamacare insurance exchanges aren’t enrolling anywhere near the number of people they were supposed to. And, there is no proof Obamacare has grown since the close of open enrollment. In fact the anecdotal and historical evidence would suggest it is now shrinking.“

Going forward, the prospects for ACA enrollment are not good. As Slate belatedly reported last month, substantial premium increases are expected for 2016. The Heartland Institute‘s “Somewhat Reasonable” blog reports that “Millions of Americans Refuse to Buy Obamacare, Prefer to Pay Penalty“. The total who have refused is 7.5 million, much more than expected, while another 12 million people have claimed that they are exempt from the ACA’s requirements. Obamacare pricing and subsidies contain perverse incentives. It remains to be seen whether the insurers dominating the exchanges will have a sufficient number of young, healthy individuals enrolled and paying inflated premiums to offset the claims of more heavily-subsidized, high-risk enrollees.

There are many other problems plaguing Obamacare, including limited access to health care providers for many enrollees. Reason.com recently asked whether Obamacare is simply too complex to work, a question based largely on the findings of an HHS Inspector General’s report. There are massive issues related to verification of eligibility for subsidies and back-end payment systems for compensating insurers:

“Think of it this way: Before Obamacare, the U.S. health system was like a giant tangled knot. If you’ve ever tried to untangle a big knot, you know that it can take a while, and that the trick is to patiently loosen one bit at a time.

Obamacare’s designers, in contrast, saw that they couldn’t undo the knot, so they added more string, and tied it into the knot that was already there. Now it’s an even bigger mess.“

The so-called Obamacare success story is wishful thinking and shameless propaganda. It has failed to accomplish its goals in terms of coverage and especially cost, it has resulted in lost coverage to millions in the individual market who “liked their plans”, and it has caused millions of others who “liked their doctors” to lose their doctors. Things are not looking any rosier as we approach the implementation of the employer mandate (which was delayed twice) in 2016.

There are many ideas in play for improving health care coverage and access post-Obamacare. Here are summaries of the plans floated so far by Republican Presidential candidates Scott Walker and Marco Rubio. Though neither plan is a detailed as I’d like, some of the proposed high-level features are promising, at least relative to the ACA. There will be more proposals from other candidates before long. I’m hopeful that they will all remember to let markets work.