Good News For Obamacare

[ Posted Tuesday, April 15th, 2014 – 16:41 UTC ]

If life were but a metaphor, the headlines would now be reading: "Train Does Not Wreck, Pulls Into Station 7 Minutes Early." Of course, I am speaking of Obamacare, a subject which Republicans have all but reduced (in their own minds, at least) to a mumbling mantra: "trainwreck... trainwreck... trainwreck." But as more and more good news appears, the real story (with apologies to Sir Arthur Conan Doyle, of course) is "the train which did not wreck in the night."

The most recent good news for Obamacare came from two different sources: insurance companies, and the Congressional Budget Office. The C.B.O. just issued a report which states that 12 million more Americans will have health insurance this year -- that's "12 million more than if Obamacare had never passed," mind you. It also had good news on the budgetary front: the costs will be $5 billion less than expected for the first year, and over $100 billion less than was estimated for the first decade. So Obamacare will achieve its main objective -- bringing health insurance to people who didn't have it -- and in doing so will cost less than previously thought.

That is pretty good news, but it doesn't stop there. Health insurance companies are showing a goodly amount of optimism about the law's second year, as well. Companies are indicating that they're going to jump into more states' insurance markets than they did in the first year, and that the marketplace idea is going to do exactly what it was designed to do: keep prices down by competition. Here's the beginning of the Politico article which broke this news:

Health insurers got their first taste of Obamacare this year. And they want seconds.

Insurers saw disaster in the fall when Obamacare's rollout flopped and was a mess. But a strong March enrollment surge, along with indications that younger and healthier people had begun signing up, has changed their attitude. Around the country, insurers are considering expanding their stake in the Obamacare exchanges next year, bringing their business to more states and counties. Some health plans that skipped the new marketplaces altogether this year are ready to dive in next year.

At least two major national insurers intend to expand their offerings, although a handful of big players like Aetna, Humana and Cigna, are keeping their cards close for now. None of the big-name insurers have signaled plans to shrink their presence or bail altogether after the first rocky year. And a slew of smaller health plans are already making moves to join more states or get into the Obamacare business for the first time.

That's good news indeed, especially when you consider that the insurers themselves have the biggest vested interest of all in Obamacare's success or failure. If the train had wrecked (or "were wrecking," or even "is headed for a wreck next year"), then the insurers would be fleeing the system in droves. They are not. Because it is working exactly as designed.

Obamacare (or, more accurately, the Patient Protection and Affordable Care Act) was designed as a tradeoff for the insurance companies. They would be forced to accept anyone (even with pre-existing conditions) and forced to get rid of the worst abuses of the old system (such as lifetime caps or charging women more). In return for these changes, they would get a lot of new customers -- and enough healthy customers to offset the costs incurred by the first part of the bargain. The deal, at heart, was an economic one for them.

Republicans have now convinced themselves that Obamacare cannot work, will not work, and has not worked so far. It is a matter of faith, to them. But the facts say otherwise. If the trainwreck had already happened (or was going to happen soon), all the insurance companies would have to do to see the wreckage would be to look at their own bottom line. They are starting to do so, and they are seeing that the system is not only sustainable, but that even more money can be made by expanding into new markets. That is a good definition of success.

Another good definition of success is the metric reported by the C.B.O. -- the number of people who will have health insurance this year who would not have had it without Obamacare. They peg this number at 12 million. It's a good measuring stick to use -- much better than "how many have signed up on the website," in fact -- and it should be treated as the bottom line on whether Obamacare succeeds overall. The main purpose of passing Obamacare in the first place was to get more people insured, after all. So the best metric to use is the one that shows how many people got health insurance who would not have had it without the Obamacare law. And that number is now targeted to be 12 million people in the first year (rising to 26 million throughout the decade -- a full million more than previously estimated).

The third definition of Obamacare's success is the budgetary cost. Now, the C.B.O. report isn't a balance sheet for the entirety of Obamacare, just the direct costs. The report points this out, stating that overall Obamacare is still projected to save the federal government more money than it costs. But just looking at the costs for the first decade, the C.B.O. reports their previous estimate of $1,487 billion was too pessimistic, and lowered it to $1,383 billion -- a drop of slightly more than $100 billion, or almost exactly 7 percent. Which is why I snarkily used "Pulls Into Station 7 Minutes Early" in my metaphorical headline.

These are all ready-made talking points for Democrats. Obamacare will insure 12 million people who would be out in the cold if the law hadn't passed. Obamacare is going to cost 7 percent less than expected, because the exchanges are indeed providing enough competition. And that competition is going to heat up next year, as insurance companies expand their offerings to new states -- which they wouldn't be doing if the train were actually wrecking.

What this all means politically is anyone's guess. But sooner or later, voters are going to start seeing the entire Republican "Obamacare trainwreck" mantra as nothing more than the refrain from an old song: "Who are you going to believe, me or your lyin' eyes?" Because my guess is that this won't be the last of the good news for Obamacare, as better and better data is released throughout the rest of this year.

-- Chris Weigant


Follow Chris on Twitter: @ChrisWeigant


4 Comments on “Good News For Obamacare”

  1. [1] 
    TheStig wrote:

    April has been a pretty good month for the PPACA. I like your metaphor, but suggest "Train Egged by Angry Mob On Maiden Run Arrives Seven Minutes Early" to fully capture the irony.

    Looking down the tracks a bit, two questions.

    Will Corporate America stop offering health insurance as part of their employee compensation packages and leave the field to the exchanges? Corporations don't particularly like managing employee health care plans and catch flack every time costs go up. The whole Employer-Provided-Insurance-Plan is basically an accident of history...price and wage controls during WWII prevented enticing scarce workers with higher pay, but payment in kind (health insurance) was deemed OK.

    Second, and more immediate question. Will failure to accept federal medicaid insurance funds have a negative impact on Republican candidates in the fall? Could Mitch McConnell fall in part because of his opposition to Obama Care? Now than would be irony!

  2. [2] 
    Chris Weigant wrote:

    TheStig -

    First, the CBO report estimated that only 7 million (out of around 160m) would lose their employer-based health care over the first decade. So, some lose, but most stay. Or at least, that's the estimate.

    Second, well, Grimes is not exactly hugging Obamacare, but she's also not exactly above hitting McConnell on the issue. The trick she's using is to not say the word "Obamacare" and instead the state-based "KYnect." We'll see... we'll see...


  3. [3] 
    DisabledDoc wrote:

    This is what I've said all along is the only true way to measure its effectiveness in terms of numbers -- although there is a definite quality improvement for those of us who had individual policies before (no worry about caps; no worry about cancellation due to having developed a serious disease; no worry about gaps in coverage eg. for mental health care). I think we can clearly say the system has not wrecked. As for calling it a true success, I think that has to wait for one major step: seeing what next year's premiums will be. If the insurance companies remain willing to provide the policies at close to this year's rates, or -- even better -- drop the rates, then the Democrats get to do an end-zone dance. Or, to use your train metaphor, the train broke a speed record.

    We might as well embrace the name Obamacare. While I have my disagreements with President Obama, most seriously on NSA and transparency issues (and I think, in general, liberals tend to 'deify' leaders less than conservatives do), this program is definitely his legacy. It's easier to say than 'Patient Protection and Affordable Care Act'. And as we call it Obamacare for decades to come (as we refer to Medicare) we will continually remind the Republicans of the dangers of blind opposition.

  4. [4] 
    Chris Weigant wrote:

    DisabledDoc -

    I've been saying for a while now that the precise point when Obamacare can be truly considered a success (and which should cue the endzone dancing) is when all the Republicans all collectively decide that they will never use the "Obamacare" label again. When I see two or three GOPers interviewed in the same week call it the "Affordable Care Act," then I will know the fight is over. Hasn't happened yet, but I remain optimistic...



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