Opinion: Why Obamacare enrollment is down
Thanks to President Donald Trump’s slashes to the federal government’s Affordable Care Act advertising budget and his administration’s “sabotage” of "Obamacare," hundreds of thousands of clueless people have been left in the dark and aren’t enrolling in Obamacare—at least, that’s what countless reporters and pundits would have you believe. However, the truth is this issue is far more complex that what many on the Left suggest.
There’s no doubt that 2019 Obamacare enrollment has dropped compared to enrollment figures from one year ago. The Associated Press reports enrollment in the federal Obamacare exchange—the health insurance exchange used by 39 states—has fallen by nearly 20 percent. The big question is, why?
First, let’s clear up the myth that enrollment declines are related in any way to Obamacare advertising. It’s virtually impossible to surf the internet or turn on a television news network and not see some article or talking head discussing Obamacare enrollment. All the government advertisements in the world can’t match the media’s coverage of Obamacare. Even more importantly, anyone enrolled in an Obamacare plan in 2018 will automatically be enrolled in the same or similar plan in 2019 if they do not reapply through the Obamacare exchanges, so even if it’s true that the reason for the decline is fewer ads, it shouldn’t make a significant impact in the final enrollment figures.
If a lack of advertising doesn’t explain the drop, what does? There are three important reasons enrollment is declining. The first is that Obamacare insurance plans have become so outrageously expensive in many states that consumers who can find ways to avoid purchasing Obamacare plans often do. The average Obamacare premium (based on the benchmark Silver Plan for a 40-year-old) in most states is higher than $500, and it even exceeds $700 in four states.
Some proponents of Obamacare say the high premiums don’t impact most families, because the federal government doles out large subsidies to millions of Obamacare applicants every year, and there is some truth to this. What they often fail to tell you is that those subsidies do nothing to help people cover the cost of their out-of-pocket expenses and deductibles. According to analysis of 2018 insurance plans by Health Pocket, the average out-of-pocket cost for a family enrolled in an Obamacare Silver Plan is greater than $13,000—a number that’s so high most families cannot even afford to use their insurance.
These problems aren’t linked to Trump in any way. Premiums and deductibles have been skyrocketing since the Obamacare exchanges first opened. In fact, premiums have doubled since Obamacare was implemented.
Obamacare is a terrible deal for virtually everyone who doesn’t have a very costly pre-existing condition, such as cancer. But in previous years, people have been forced to purchase these health insurance plans or else pay a huge fine by the federal government, propping up the failing Obamacare exchanges. It’s easy to sell terrible health insurance plans when federal officials effectively force people to buy them!
When Republicans and President Trump passed the Tax Cuts and Jobs Act in 2017, they reduced the penalty for the individual mandate to $0, a provision that won’t go into effect until 2019. That means this is the first year since the Affordable Care Act was passed into law that Americans won’t be penalized for choosing not to buy health insurance plans they don’t want and often can’t afford to use. This is the second important reason we’re seeing Obamacare enrollment drop.
If Obamacare is so expensive that people are being driven away from these plans, does that mean people are choosing not to buy any health insurance at all? Although we don’t have the final figures yet, it’s highly likely many people who are choosing not to buy health insurance through an Obamacare exchange that still need to are instead opting to purchase a short-term, limited-duration health insurance plan, which the Trump administration made possible for states to expand earlier in 2018.
Short-term plans can be bought for 12-month terms (renewable up to 36 months) for a fraction of the cost of an Obamacare plan. E-health reports the annual cost of short-term health insurance for a family of three is about $1,400, compared to more than $10,300 for an Obamacare Bronze Plan, the cheapest Obamacare plan available. Deductibles are often lower for short-term plans as well.
Twelve-month short-term plans aren’t available in every state, but in many states with the highest Obamacare premiums, they’ve been legalized, making them great options for families without pre-existing conditions.
A third reason enrollment is declining is because the economy is improving. Unemployment has dropped by fourth-tenths of a percentage point in just the past year (a roughly 10 percent improvement), and total employment has increased by more than 4.5 million since November 2016. It’s likely that many people have jobs today that pay for their health insurance who didn’t just 12 months ago.
Obamacare enrollment has declined, but it’s not because the Trump administration has deceived people by cutting a relatively meaningless advertising budget. It’s almost entirely because President Trump has created opportunities for families to escape Obamacare’s huge costs. Honest analysts should celebrate declining Obamacare enrollment, not lament the fact fewer people have chosen to subject themselves to unnecessarily high health insurance expenses.
Justin Haskins is the executive editor and a research fellow at The Heartland Institute and the editor-in-chief of StoppingSocialism.com.