Skip to content
Health Costs
Link copied to clipboard

Counterpoint: Why Obamacare insurance is no bargain

I would love to share this optimistic view.  But it's wrong.

If you happen to be one of the unfortunate unsubsidized folks buying an Obamacare plan, you don't need me to tell you this.  Before the most recent hikes for 2017 went into effect the average 40 year old enrolling in the lowest tier bronze plan would pay $300 per month, and that came with a $6,000 deductible.  Regardless of the debate on what was available at what price pre-Obamacare, in absolute terms like health care costs relative to the monthly mortgage, the Affordable Care Act would be better renamed as the Unaffordable Care Act.

Even relatively speaking, however, the analysis Dr. Field relies on has serious methodological flaws that Brian Blase in Forbes points out in detail.  There is also ample other evidence that insurance premiums have risen significantly since enrollment in Obamacare began in 2014. Consider this analysis from the S&P global institute that tracks per member per month (PMPM) payments over time for those in the individual and employer market.

Clearly, it appears that monthly payments in the individual policy market exploded in 2014, which just happens to coincide with the start of the Obamacare marketplace.  The reasons for the exploding premium growth have everything to do with bad policy mixed with the best of intentions.  Cheap health insurance requires a large pool of healthy individuals to pay for a minority of sick individuals.  Obamacare made this an impossibility, and had premium increases baked in by forcing insurers to:

  1. mandate coverage regardless of pre-existing conditions;

  2. limit out-of-pocket costs for a given year;

  3. restrict the ability to charge different premiums based on anything but age, and smoking habits;

  4. place minimum requirements on benefits offered;

  5. eliminate lifetime limits on coverage.

Paradoxically, all the punch lines that made for rousing political stump speeches about affordable care turned out to be the very thing that made health care unaffordable.

Finally, the idea forwarded that the exchanges are working to provide improved coverage at a lower cost is countered by the current performance of the exchanges that are plagued by enrolling far fewer healthy enrollees than expected.  A study done at the University of Pennsylvania confirms the obvious – at the current Obamacare marketplace cost point, eligible persons that make too much to qualify for a subsidy are better off foregoing health insurance, and paying the mandate penalty.  As a result, healthy individuals making at least a middle class income are foregoing enrollment in the marketplace.   Only 10% of the people who signed up for an exchange plan in the 2016 open enrollment period had an income above 300% of the Federal Poverty Line ($35,640 for a single person).
So, no Dr. Field, Obamacare insurance is not a bargain.  Not by a long shot.

Anish Koka, M.D., a cardiologist in private practice in Philadelphia, blogs on health-care policy and delivery at The Health Care Blog.


Have a health care question or frustration? Share your story »