So, can we finally say that the Affordable Care Act is failing? Have Democrats engineered an Obamacare bailout that must be stopped?
No and no.
Last week the federal government released the most recent and most detailed figures to date for health-insurance enrollment under the health-care law. All told, 2.2 million Americans signed up for insurance in the new marketplaces by the end of last year. That’s lower than projected but not catastrophic. The big deadline to sign up millions more isn’t until March 31, and enrollment probably will accelerate as that date approaches, particularly now that HealthCare.gov is significantly more functional.
What’s critical, though, is that the marketplaces develop sustainably, with enough healthy people paying in to offset the health-care costs of the sick. The government reported that a quarter of new enrollees are age 18 to 34. The Obama administration aims for 40 percent. Failing to reach that goal could — but is not guaranteed to — encourage insurance companies to raise premiums next year, deterring even more healthy people from signing up. Higher premiums would cost many insurance customers — and the federal government, which subsidizes low- and middle-income Americans’ policies — real money.
It was unrealistic to expect the system to work flawlessly immediately upon implementation. In fact, the law’s authors anticipated that and put safeguards in place. One spreads risk among insurance companies by transferring money from those that see relatively low claims costs to those that see relatively high costs. Another helps pay very high medical bills from individual patients.
Both measures are temporary, and they help guarantee that companies make money by efficiently delivering coverage, not by dissuading ill applicants from signing up. But the federal government might have to kick in some money. The Kaiser Family Foundation estimates that a risk pool such as the one reflected in the latest enrollment report would cut into insurance companies’ bottom line by only a few percentage points, and the stabilizers would suppress a move to hike premiums in tandem. After a few years and, presumably, many more enrollments, the stabilizers will be phased out.
Critics, though, are describing the possibility that these stabilizers will have to kick in as a bailout. Some have even called to repeal them. The argument has some least-common-denominator political appeal, but it amounts to little more than name-calling.
Spreading risk is insurance, not a bailout. Smart contingency planning is not a bailout. Giving the most ambitious reform of the health-care system in decades more than several months to take root is not a bailout. If the critics want to help, they should encourage more people to enroll — for their health, and for the health of the health-care system.