Democrats are no doubt eager to put 2013 and the disastrous ObamaCare roll-out behind them. There is, however, a reason they pushed implementation of the health care law until well after Obama’s reelection. There are 5 major reasons the Democrats long ObamaCare nightmare is just beginning.
1. People who think they have coverage, don’t.
Approximately 2 million Americans have signed up for ObamaCare, far below the Administration’s goal. As these Americans may learn, though, signing up for coverage through the exchanges doesn’t mean they have coverage. Many haven’t yet made their first premium payment. Washington and Nevada, the only states that report this number, say half of the enrollees have not made a premium payment. The Obama Administration has pressured insurance companies to accept payments until January 10th. It is unclear, however, if people even understand they need to make a payment.
Beyond this, there are problems with processing individual applications. The state of Iowa recently asked 16,000 people to reapply for insurance, because of ongoing problems with the federal exchange. The state of Oregon made robocalls to thousands of residents, warning them to seek coverage on their own if they hadn’t heard from the state exchange by December 23. Potentially hundreds of thousands of people are entering the new year thinking they have coverage and will soon learn the don’t.
2. Millions more people will lose insurance in 2014.
News that 5 million individuals had their health insurance policies cancelled at the end of 2013 came as a shock to most Americans. Obama and Democrats who supported ObamaCare had repeatedly assured the public that if they like their policy they could keep it. The fact that wasn’t true smashed their credibility. Unfortunately for Democrats, millions more Americans will have their existing policies cancelled next year.
If a person in the individual insurance market renewed their policy in 2013, they didn’t receive a cancellation notice. They will next year, however. Potentially 10-15 million Americans will have their policies cancelled, just aead of the mid-term elections.
3. Deductible Shock
Many first-time buyers of insurance coverage are likely to be shocked by the high deductibles under ObamaCare’s most affordable plans. Under the cheapest plan in ObamaCare, a family of 4 would have to pay over $12,000 in medical bills before insurance kicked in. Every year. A recent study found that just 14% of Americans understood insurance provisions like “deductibles” and “co-pays.” The other 86% are due for a big shock in 2014.
4. Insurance Premium Sticker Shock
ObamaCare only “works” if millions of healthy, young adults buy health insurance. Their premiums are needed to subsidize insurance for older and sicker adults. For young adults, though, anything beyond a catastrophic plan is largely unnecessary. The ObamaCare exchanges have not reported demographic information for people buying coverage, but it is reasonable to assume, given the difficulty of signing up, that those who most need coverage, i.e. older and sicker adults, make up a large share of new enrollees.
Even though many Americans are already facing higher premiums through ObamaCare, the costs could skyrocket even more next year unless millions of healthy people buy coverage. Insurance companies will have to drastically increase premiums to cover their costs. This will make coverage more unaffordable for many Americans, potentially causing a “death spiral” in coverage. As relatively health Americans drop coverage, premiums will have to increase for those who are in the most need of medical care.
5. Employer Mandate
In July 2013, President Obama announced that he had unilaterally decided to delay ObamaCare’s mandate that employers provide coverage until 2015. Employers with more than 50 employees now have to provide health insurance or pay a penalty, effective January 1, 2015. The penalty for not providing coverage is $3,000 per employee. For many businesses, it will be cheaper to pay the penalty than provide health insurance, when there is so much uncertainty about future premium costs.
This is a feature of the law, not a bug. The long-term goal is to get Americans out of employer-provided health coverage and into the exchanges, leading ultimately to a single-payer system. Had Democrats really wanted to encourage employers to provide coverage, they would have made the penalty higher than annual premium costs. They also wouldn’t have put a tax on policies offered by employers.
Unfortunately for Democrats, businesses will inform their employees of their plans around the middle of 2014, just before the midterm elections. Many businesses will alter their operations to fall below the mandate threshold. Others will simply drop coverage and pay the penalty. This will be a shock for most people, especially since most Americans have health insurance through their employer. That this shock could come just weeks before the midterm elections will create a nightmare for Democrats on the ballot.
As we enter 2014, Democrats are trying to reassure themselves that Americans will eventually embrace ObamaCare. They point to the “good” things in the law, i.e. parents able to keep kids on their policy until they are 26, free health screenings and new prescription drug benefits. The problem for Democrats, however, is that those provisions are already in effect and have been since 2010. Any benefit Americans perceive from these provisions is already factored into their views of ObamaCare.
The Democrats front-loaded all the “good” provisions in ObamaCare and put off the politically painful provisions until after Obama’s reelection. The tab is coming due in 2014, however. The potentially very negative consequences of the law will unfold throughout the year. Americans will finally find out “what’s in the bill.” They are not likely to be happy.