President Obama's signature health reform law, the Affordable Care Act -- which you probably know as "Obamacare" -- has been controversial and generally disliked by about half of Americans since it was signed into law in March 2010.
The Kaiser Family Foundation Health Tracking Poll has been closely monitoring the public's sentiment toward Obamacare on a near-monthly basis since it was signed into law. You can essentially count on two hands how many months over the past six years the general public had a "favorable" view on the law.
Although Obamacare enrolled about 12.7 million people through its marketplace exchanges in 2016, and a nearly equal number of lower-income individuals and families have gained medical coverage through the expansion of Medicaid in 31 states, the program's long-term survival is still in question, with premium prices looking as if they could soar by a double-digit percentage in 2017. Another analysis conducted by the Kaiser Family Foundation found that a weighted average increase of 11% could be in store, based on the price of the lowest-cost silver plan in 2016 compared to 2017.
"What's wrong with Obamacare?" you might be wondering. Unfortunately, there's no single or centralized problem, but rather a confluence of factors that have come together to put the future of President Obama's hallmark legislation in doubt.
First, young-adult enrollment hasn't been up to par. Young adults are typically healthier and less likely to go to the doctor, meaning their enrollment and premium payments are vital for insurers looking to offset the higher costs of treating sicker and/or older Americans. By a similar token, the Shared Responsibility Payment, or SRP, may not be steep enough to encourage young adults to enroll. The SRP is the "penalty" assessed for violating the individual mandate by not buying health insurance. In 2014, the SRP was the greater of $95 or 1% of modified adjusted gross income, or MAGI. In 2016, it has jumped to the greater of $695 or 2.5% MAGI. Even with this jump, the Kaiser Family Foundation predicts an average penalty of $969, which is still far less than the cost of a full year of healthcare premium payments.
Secondly, the "risk corridor" has failed badly. The risk corridor program was designed to provide payments to insurers losing excessive amounts of money on Obamacare's exchanges. This loss protection was meant to encourage more insurers to enter the marketplace by giving them a safety net while they figured out an appropriate level for premium prices. The funds for these payments were to be provided by overly profitable insurers on Obamacare's exchanges. Ultimately, only 12.6% of the $2.87 billion requested wound up being paid out, leading more than half of Obamacare's healthcare cooperatives to close their doors.
Finally, the checks and balances designed to keep insurers from jacking up premiums aren't sufficient. Each state has an Office of the Insurance Commissioner to which insurers submit requests for any rate increases (or decreases) of 10% or more. While the OICs can negotiate with insurers, they essentially have no bargaining power if the rate hike is justified. They can call out insurers on a public platform, but health-benefit providers still remain largely in control of their premium pricing.
Mind you, after the events in the UK over the last couple of weeks or so, most things are going to appear tame in comparison.
