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.
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:
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.
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.
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
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 [email protected] and follow him on Twitter @EricBoehm87
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