During his last State of the Union address, President Obama hardly mentioned the Affordable Care Act. He did not mention the 7 million new Medicaid enrollees, many of which cannot find a doctor willing to treat them for Medicaid’s paltry fees. The president did not talk about the 9 million to 11 million Americans with coverage through the state and federal health insurance exchanges. Nor did he mention enrollment is only about half what the Congressional Budget Office projected would enroll only a few years ago.
Here is what he did say “… the Affordable Care Act is all about… filling the gaps in employer-based care… so when you lose a job, or you go back to school or you strike out and launch that new business you’ll still have coverage.”
This all sounds well and good. But it’s more rhetoric than reality.
Unemployed: The reality is many people losing their job would not qualify for a subsidy because their most recent tax return would likely show income too high to qualify for a subsidy. After losing a job, the unemployed would have to be out of work for a year or more before they would qualify for a subsidy. In other words, they are likely no better off than they would be under COBRA.
Students: Unless they are middle-aged returning students with preexisting conditions, it’s likely a young person returning to school could have bought limited benefit coverage from their university much cheaper prior to Obamacare.
Entrepreneurs: As far as people who want to launch a business, they’d likely be better off without a mandate that forces them to have coverage or pay a fine. They would be better off with affordable pre-Obamacare coverage than the high-priced, mandated coverage now available. My wife launched her consulting business years ago. Her health coverage is now much more expensive (and her benefits lower) than ever before. If anything, Obamacare is driving would-be entrepreneurs to stay with employers.
Conclusion: The federal and state health insurance exchanges are suffering adverse selection as healthy people shun the costly premiums because the plans meet little of their medical needs. The next Administration will have to reform the ACA with more flexible coverage and allow consumers to exercise cost-control measures in ways that truly make health insurance affordable.
This post has been updated from an earlier version posted January 12 prior to the State of the Union speech.