Last Monday marked the deadline for new sign-ups under Obamacare. On Tuesday, I appeared on CNBC to discuss the future of Obamacare and the effect it is likely have on the mid-term elections.
Following, in Q&A format, are the talking points I provided to CNBC for the segment:
Now that the nominal deadline for sign-ups under Obamacare has passed, what can we say about the program?
Remember, Obamacare is an effort to get health insurance to all Americans. The Administration is touting the total number of sign-ups. But the more important metric is how many young healthy people sign up for insurance. That number appears to be lagging far below the Administration’s expectations.
Continuing to allow people who have started the process to sign up (per the Administration announcement last week) is unlikely to make the numbers more favorable. If anything, it will allow more people who become sick to get insurance.
How is this likely to play out in the marketplace?
Insurance companies, faced with a pool of insureds that is disproportionally sick, will raise premiums. Companies already are announcing higher premiums for next year. If that trend continues as more companies announce 2015 premiums in the coming months, there could be an outcry similar to when Americans learned they could not keep their old insurance policies.
What does this mean for the upcoming election?
The President is trying to shift the debate to the need for new federal programs to address income inequality. But Paul Ryan has sought to blunt that challenge with his report asserting that inequality has increased despite fifty years of extensive programs.
Republicans will continue to pound away at the failings of Obamacare: the President’s false promise that people could keep their plans, the constantly shifting deadlines of questionable constitutionality, and the CBO report that the labor force is adversely affected. I think Republicans will keep the House. Whether they take the Senate depends on the candidates that emerge from the primaries -- can they capture Independent votes? The initial results are hopeful for Republicans -- the candidates in New Hampshire and Colorado are the type of candidate that can do that.
What does this mean about the future of Obamacare?
There is still one court case that could derail Obamacare: whether people who buy insurance through the federal websites are entitled to government subsidies. Those subsidies are crucial to getting young people to sign up.
But, unless the courts decide otherwise, Obamacare likely is not going anywhere. Even if the Republicans run the table in 2016, by then tens of millions of people will be receiving insurance subsidies under the program. The program will be embedded in our society. Taking those subsidies away will be like taking away Social Security. The best we can hope for is the parties come together to fix the law.
For the next few years, the program will “bail out” insurance companies who suffer losses. But those bail outs end in 2017. You have to wonder whether companies will provide health insurance under a law that limits their profits and does not allow them to charge more for preexisting conditions. If insurance companies exit then the federal government becomes the health insurer of last resort.
