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Total Team Solutions Blog

Apr 12 2016

Obamacare is Failing

By: John Morlock


As we head into 2016, it is hard to believe that the Patient Protection and Affordable Care Act (aka Obamacare or the PPACA) is six year old already.  However, if you look at the results, by most measures it is failing miserably. 

On the positive side, the number of uninsured Americans has been reduced by 22 million.  Yet this is only 73% of the expected number of 30 million.  Similarly, while Obamacare supporters predicted that there would be 17 million new enrollees in Medicaid, the actual number is only 13 million, or 76% the expected number.  However, when you look at the newly covered under the exchanges, that number is only 12 million, which is only 57% of the expected number of 21 million.  By any measure, only achieving 57% of your goal can hardly be considered anything but a failure.  And it gets worse, if you can believe it.

With exchange enrollment down 43% and Medicaid enrollment down 24%, one would expect that the cost of the PPACA would be down significantly as well.  However, costs are only 17% below the expected figures.  How can this be?  Obviously, the cost of covering Medicaid enrollees and exchange subsidies must be significantly higher that was predicted.  In fact, the government now predicts that the average subsidy in 2016 will be 18% higher than was predicted in March 2015.  That’s almost 20% higher than was predicted just a year ago, not what was predicted back in 2010 when the program started.  This is a clear indication that enrollees are less healthy (resulting in higher claims and thus higher premiums) and poorer (resulting in higher subsidies) that was predicted just one year ago. 

As if that is not bad enough, the story gets even worse.  Since those being covered are sicker than expected, insurers will need to continue to raise premiums to maintain coverage given the higher claims expense, which in turn will increase the government expense for subsidies and also likely discourage new enrollees while potentially causing some enrollees to drop their coverage.  Yet, the ones most likely to drop coverage are those who are healthy, so the trend to an unhealthy population in the exchanges will continue to accelerate.  This in turn will cause premiums and subsidies to increase further.  This has been supported by studies that have shown claims processed under exchange policies are approximately 20% higher that under the employer group insurance market. 

So with escalating costs and underperforming enrollments, PPACA supporters still estimate that there are 6 million exchange eligible Americans who continue to be uninsured, even despite individual mandate penalty of at least $695 per year.  With these results, how can this be deemed anything but a failure?

For more information on the Affordable Care Act and how it impacts your business and employees, please contact John Morlock at


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