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Three problems that won’t be solved by fixing the Obamacare exchange glitches

By   /   October 22, 2013  /   1 Comment

Part 43 of 96 in the series Obamacare
AP photo

AND HE SAYS HE’S MAD: President Barack Obama speaks during an event Monday in the Rose Garden of the White House on the initial rollout of the health care overhaul.

 

By Eric Boehm | Watchdog.org

President Barack Obama swallowed hard Monday morning and admitted the health insurance exchanges simply are not working.

“Nobody’s madder than me about the fact that the website isn’t working as well as it should,” Obama told reporters at the White House Rose Garden news conference.

But aside from promising that the exchange’s problems would be fixed soon, there was no indication that the White House has any sense of how long it might take to get the websites into working order.

For that matter, there has been little indication that the administration even has a handle on the depth of problems plaguing the much-heralded exchanges that formed a cornerstone of the Affordable Care Act.

After three weeks, the White House also refuses to release information on how many people have successfully navigated the exchanges and signed up for health insurance.  If the experience of many state-run exchanges is any indication, there are not too many.

On Monday, a blog post on the Department of Health and Human Services, which is charged with running the federal exchanges, said “nearly half a million applications for coverage have been submitted from across the nation.”

The first word in that statement is a potentially huge qualifier.

GOING UP: Premiums are going to rise in 45 out of 50 states, according to an analysis by the Heritage Foundation. (Click to enlarge)

Regardless of how long it takes to get the exchanges up and running — if they ever do — opponents of the president’s health care initiative say there are other problems that won’t be addressed by fixing the exchange websites.

Here’s three of them:

1. Costs

For a law that was literally and figurative sold to the American people as promising “affordable” health insurance, the Affordable Care Act doesn’t seem to be keeping up its end of the promise.

Though the department has avoided providing cost comparisons, the Heritage Foundation, a conservative think tank, did their best to crunch the numbers based on the current costs of insurance through nongroup plans (the closest equivalent to the Obamacare exchanges that existed before Oct. 1) in each state and the average costs for insurance through the exchanges.

According to their data, Obamacare will cause costs to decline in only five states.

So if you live in Colorado, New Jersey, New York, Ohio or Rhode Island, congratulations!  If not, hopefully you don’t live in Virginia, where rates are expected to climb by more than 200 percent, the highest increase in the nation.

2. Young people won’t sign up

Like the old saying about leading a horse to water, you can build a working health insurance exchange, but you can’t force young people to use it.

Well, maybe they can build a working exchange.  That’s yet to be proven.

YOUNG, WILD AND HEALTHY: The Affordable Care Act depends on healthy young people to subsidize others' care, but young people aren't buying it.

YOUNG, WILD AND HEALTHY: The Affordable Care Act depends on healthy young people to subsidize others’ care, but young people aren’t buying it.

But there already is some pretty good evidence that young people wouldn’t be flocking to the exchanges even if they were in good working order.  And that’s a big deal, because the arithmetic behind Obamacare requires that lots of young, relatively healthy people buy insurance and effectively subsidize the cost of the older, less healthy, more expensive people in the system.

As Cathy Reisenwitz wrote last week, this is why the whole scheme shouldn’t be called insurance at all – because it’s really cost-pooling.

If lots of young people decide they would rather go without health coverage, even if it means paying higher taxes as a penalty, it could seriously undercut the entire system.

Even former President Bill Clinton admitted the potential problem, recently telling MSNBC that Obamacare “only works if the young people show up.

And why are lots of young people not showing up for Obamacare? Refer back to the first point.  While all adults will see higher premiums in most states, the increases are generally sharper for young people.

When you do the math, it’s cheaper to pay the penalty, but that’s not the way the system was designed. It counts on young people enrolling, but young people don’t want any part of it,” Patrick Richardson, a senior at the University of Toledo in Ohio, told Watchdog.org’s Kathryn Watson earlier this month.

3. Disincentives for marriage, promotions and other things

THE BOOK OF LOVE: Got a lot more complicated with the passage of Obamacare.  Some couples might decide it is better to skip the wedding and save on their premiums.

THE BOOK OF LOVE: Got a lot more complicated with the passage of Obamacare. Some couples might decide it is better to skip the wedding and save on their premiums.

Because of how the subsidies in the Affordable Care Act are structured, people may have a pretty good incentive to avoid things like marriage and job promotions that pay them a higher salary.

For example, two people with individual incomes of about $20,000 annually would qualify for as much as $6,000 in subsidies to help defray the cost of health insurance.  But if those two people got married, their combined income of $40,000 annually would result in health care subsidies that total about $4,000 less than when they were single, according to a study published by The Foundation for Government Accountability, a fiscally conservative think tank in Washington, D.C.

“The tax credits in Obamacare are structured in such a manner that a newly married couple may be surprised by a huge tax bill, due to the marriage penalty in the law,” said Josh Archambault, a senior fellow with the foundation. “The couple will be making no additional money, but their marriage certificate paper can result in a multi-thousand dollar drop in their credit.”

That same phenomena could affect people who get offered promotions and higher pay at their jobs.  Taking a pay increase actually could hurt their individual bottom line by reducing the amount of subsidies available.

The exchanges will probably get fixed, someday.  Other problems will remain.

Boehm can be reached at EBoehm@Watchdog.org and follow him on Twitter @EricBoehm87

Part of 96 in the series Obamacare
  1. Obamacare compliance means less money for TN service agencies
  2. The mystery of Obamacare spending in Arkansas
  3. Obamacare raises questions for MD small business owners
  4. Kansas official on Obamacare: ‘Let someone else be the guinea pig’
  5. Obamacare insurance marketplace has plenty of kinks on first day
  6. OR’s Obamacare insurance marketplace hits technological snag
  7. Fail: Day 1 of the New Mexico Obamacare rollout
  8. Senator asks: Do you want this dysfunctional government taking over health care?
  9. Jobs, coverage at risk with Obamacare, MN union health official says
  10. Oregon’s Obamacare ads resemble middle school art
  11. VIDEO: Obamacare vs Affordable Care Act: Comedy triumphs in court of confusion
  12. Patience is key to navigating Illinois’ Obamacare marketplace
  13. Hawaii residents, lawmakers frustrated with health connector glitches
  14. Healthy young, key to Obamacare, aren’t buying it
  15. NM’s health exchange tries to lure ‘young invincibles’
  16. Obama drama: Senator blames governor for big rate hikes
  17. Progressive group navigates Oregon students through Obamacare
  18. Maddening: Trying to log onto federal health care site
  19. You know that one guy who successfully signed up for Obamacare? He didn’t
  20. What’s wrong? It’s been a week, and Obamacare website still not working
  21. HHS Secretary Sebelius back in FL after embarrassing Obamacare rollout
  22. Health centers enroll Floridians in Obamacare as application problems persist
  23. VIDEO: Stewart skewers Sebelius on Obamacare
  24. Obamacare effect? 9 companies exit Nebraska’s health insurance market
  25. Obamacare: Children of undocumented parents face an uncertain future
  26. Which way do we go? Obamacare navigator registration in TN in question
  27. NM health exchange tries to ease problems with Obamacare website
  28. CPA says hype over Obamacare small business tax credit is misleading
  29. Obamacare navigator under fire for arrest warrant
  30. Reports of Obamacare fraud emerge in Tennessee
  31. After two weeks, FL online Obamacare enrollees are hard to find
  32. Illinois state governor touts 100K Obamacare enrollees, all in Medicaid
  33. Kansas lawmaker calls for crackdown on Obamacare navigators
  34. WI health care exchange seeing few getting through
  35. Hawaii’s Obamacare exchange relaunches with more glitches
  36. We’ll know next month how many people in NM signed up for Obamacare — maybe
  37. Zero: Number of Nebraskans Obamacare navigators have signed up
  38. It took this Delaware woman 11 days to sign up for Obamacare – and she was the first
  39. How many people have signed up for health insurance in VA? Who knows?
  40. What else? NM federal health exchange ads stalled due to website problems
  41. Blue Cross hires temp workers to deal with Obamacare glitches
  42. If Obamacare is the next Medicare, will physicians leave en masse?
  43. Three problems that won’t be solved by fixing the Obamacare exchange glitches
  44. Plenty of Oregonians interested in Obamacare, but none can enroll online
  45. Criticize this: Obamacare premiums a near match to WI disclosures
  46. Report: Missourians will see sharp rise in premiums under Obamacare
  47. Kansas navigators say they’ve enrolled no one in Obamacare
  48. Obamacare too costly for rich Coloradans, Democrat congressman says
  49. Study: Kansas premiums to spike following Obamacare rollout
  50. Hang on to your candy: Creepy Uncle Sam is back
  51. Obamacare or bust: NM Watchdog turned back again
  52. Medical journals, experts refute claim that Medicaid cuts ER use
  53. Arkansas spends $4M on Obamacare ads, wants more
  54. LOL: In July video, HHS bragged about being ‘on schedule’ with Obamacare
  55. Illinois uses Day of the Dead to market Obamacare
  56. Sebelius denies GOP’s Terry ‘unreliable’ Obamacare info
  57. About 290,000 Washington residents lose health insurance plans
  58. Broken promise: Obamacare cancels almost 20,000 Kansas health care plans
  59. Top hospitals opt out of Obamacare
  60. Obamacare moves to intensive care
  61. Obamacare provision could lead to more Medicaid fraud
  62. Obamacare: Religious groups want to ‘move mountains’
  63. Obamacare hitting Wisconsin residents with double whammy
  64. Kansas AG: Obamacare threatens consumer privacy
  65. 1,500 in New Mexico have to move out of the high-risk insurance pool
  66. Cover Oregon website fiasco creates jobs, but costs millions
  67. For Florida’s Obamacare small business exchange, it’s crunch time
  68. Only 877 Wisconsinites have signed up for Obamacare, federal report says
  69. Just 172 in NM have completed Obamacare applications: ‘Woefully inadequate,’ says NMIX board member
  70. With only 346 Oklahomans signed up, leaders decry ‘Obamacare debacle’
  71. Defying Obamacare: ‘Send them the bill,’ NM insurance official says
  72. Kansas Obamacare enrollment dwarfed by nearly 20,000 cancellations
  73. Numbers don’t lie: In Illinois, Obamacare means Medicaid
  74. Wisconsin governor proposes insurance plan to address Obamacare rollout failure
  75. Tennesseans might know Tuesday if they can keep canceled health insurance
  76. People demand answers over Oregon’s Obamacare fail
  77. Calif. says ‘no’ to Obamacare freebies, makes own law
  78. HI health exchange violates federal law, League of Women Voters say
  79. Obamacare video winner: ‘Forget about the price tag’
  80. Harvard study finds ‘striking’ rejection of Obamacare by young Americans
  81. HI health exchange has signed up 574 people, for about $348,000 apiece
  82. Are the uninsured getting Obamacare coverage in Illinois?
  83. Secret Obamacare handbook the feds don’t want you to see is online
  84. Lost in translation: Once-supportive Hispanics turning backs on Obama, ACA
  85. HI Obamacare exchange not fiscally sustainable, lawmakers told
  86. Illinois’ latest Obamacare targets: gold diggers and momma’s boys
  87. Now Democrats are bashing California’s Obamacare exchange, too
  88. Obamacare: For $1.37M we get Richard Simmons in lurid web stream
  89. Obamacare: A welcome mat for IRS horrors
  90. California senator seeks audit of state Obamacare exchange
  91. Report: Hawaii ranks worst for Obamacare signups
  92. CA senator sues Obamacare exchange for causing policy cancellations of 1M
  93. Failure of Maryland Obamacare exchange could mean higher premiums in North Dakota
  94. Video: Watch Creepy Uncle Sam make it rain
  95. Five bright spots surrounding the Obamacare exchange failures
  96. Obamacare architect admitted in 2012 states without exchanges lose subsidies

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Eric is a reporter for Watchdog.org and former bureau chief for Pennsylvania Independent. He lives in Minneapolis, Minnesota, where he enjoys great weather and low taxes while writing about state governments, pensions, labor issues and economic/civil liberty. Previously, he worked for more than three years in Harrisburg, Pennsylvania, covering Pennsylvania state politics and occasionally sneaking across the border to Delaware to buy six-packs of beer. He has also lived (in order of desirability) in Brussels, Belgium, Pennsburg, Pa., Fairfield, Conn., and Rochester, N.Y. His work has appeared in Reason Magazine, National Review Online, The Freeman Magazine, The Philadelphia Inquirer, The Washington Examiner and elsewhere. He received a bachelor's degree from Fairfield University in 2009, but he refuses to hang on his wall until his student loans are fully paid off sometime in the mid-2020s. When he steps away from the computer, he enjoys drinking craft beers in classy bars, cheering for an eclectic mix of favorite sports teams (mostly based in Philadelphia) and traveling to new places.

  • FreeMktMonkey

    In a sense all insurance is cost pooling, where to limit risk and protect assets participants willingly accept a small loss (the premium) to provide a pool from which to protect against a much larger unexpected loss that would be unaffordable otherwise. This is the proper use of insurance.
    Any attempt to “insure” that which is not out of the ordinary and otherwise affordable is a fool’s game that only insures the incentivized overuse of others will be in your premium. Such arrangements are best called third party prepayment schemes that mostly benefit the seller, and can be distinguished by a desire to use the covered services, under the false comfort and illusion of getting something for free or almost free, blind to the fact of the massive overuse it causes. Real insurance, on the other hand protects against events one hopes will never occur, for which claims never have to be made.
    America fell into the third party trap over the years and became a huge problem and the number one driver of healthcare costs outstripping inflation. The only true solution to the problem is in returning to more direct payment (HSAs)relative to the (sometimes necessary) poison of third party payment. The misconceptions surrounding this are shared by most on the Left and many on the Right as well. A nation poorly educated on these realities and the basics of personal finance and economics opens itself to “solutions” that miss the root cause of the problem entirely, opening the door to the disaster that is now Obamacare.