In Case You Were Wondering, Obamacare is Going Great

The Democrats have taken to gloating that the Republicans don’t have a politically feasible way to undo Obamacare until at least 2017, which is more or less true (especially given the fact that Republicans in Congress are both rudderless and spineless). To listen to Democrats, this is good news for Democrats and bad news for Republicans. However, in order to believe this narrative you would have to ignore one salient fact: the Obamacare rollout is an ongoing dumpster fire that is going to be a political liability for the Democrats again in 2016, if things do not turn around quickly.

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In the first place, the health insurance co-ops, which were propped up by massive tax friendly loans, are self-destructing faster than any of the dozens of taxpayer-backed “green energy” companies that have cratered under Obama’s watch. Of the 24 such co-ops that were started under the program, 9 have already gone under (in less than two years) and 11 more are on the brink of insolvency. It doesn’t take a mathematical genius to predict that, come election day on 2016, there might not be a single Obamacare co-op operating in the country – which was one of the program’s key components to get low income, higher risk people insured.

In the second place, the Obama administration has all but publicly admitted defeat in terms of meeting – or even approaching – enrollment estimates:

Yesterday, the Obama administration said that they expect to have 10 million people enrolled on the Obamacare insurance exchanges in 2016. They further said they expect to sign-up only one in four of those still uninsured and eligible during the 2016 open enrollment scheduled to begin on November 1.

These are astonishing admissions.

In 2013 the Congressional Budget Office (CBO) estimated that the Obamacare insurance exchanges would enroll an average of 22 million people during 2016.

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If the administration is able achieve an average paid-for enrollment of 10 million people during 2016, they would have only signed up 36% of the potential market of 28.1 million.

Why is this important?

Because in order for a health insurance program to be sustainable and affordable, it must sign up many more healthy people than sick people in order to pay the costs of those who are sick. Since Obamacare is still relatively new we don’t know for certain what percentage of the total eligible we need to make the program work. But, we do know that the longtime health insurance industry underwriting rule is that 75% of an eligible group is necessary to get “an adequate cross section of risk”–the right balance between sick and healthy.

By historical standards, if the administration were to meet its 2016 enrollment estimates it would have only half of the population needed to make the program sustainable. No matter what Obamacare’s actual take-up requirement turns out to be, 36% is not even close.

The most recent Obamacare claims data also tells us this program is nowhere near where it needs to be in order to be sustainable.

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Let me make a further not-very-bold prediction about these bleak enrollment numbers – the Obamacare penalties are scheduled to take a drastic uptick this year and Democrats are going to be pleading with the Administration beginning pretty much immediately to waive millions of penalties, which they have already done for spurious reasons that were pretty obviously political.

As a result, people are going to get the (correct) impression that as long as the penalties endanger Democrats, they won’t be enforced strictly (or, worse, will be enforced haphazardly), which will as a natural consequence cause enrollment numbers in the future to be even weaker. In other words, Democrats are trading the long-term fiscal solvency of the program for short term avoidance of ballot box annihiliation.

Sooner or later the bill is going to come paid on this ponzi scheme and Democrats – who passed this without a single Republican vote and who have been clear that they stand by the program and all it does – will own it completely. Republicans should continue to make clear their opposition to the bill in its entirety and begin working on a solution to the fiscal problems it has created for insurers that will take effect the day Obama leaves office.

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