White House Admits: 25% Dumped Their ObamaCare Plans Last Year
Health Reform: President Obama described ObamaCare as a great product. So why did one in four of those who signed up in 2015 cancel their plans?
An official report released last Friday said that enrollment in the ObamaCare exchanges fell to 8.8 million by the end of the year, from 11.7 million who’d initially signed up. That’s a 25% decline.
About 1.5 million who signed up never paid their first premium, so the number of actual enrollees dropped to 10.2 million by the end of March 2015. Then another 1.1 million canceled their coverage in the last six months of the year, according to an analysis by the Mercatus Center‘s Brian Blase. Half a million got booted off because they couldn’t verify citizenship or immigration status.
There’s been no solid research to why so many canceled their ObamaCare plans before the year was out, but it’s not hard to make educated guesses.
For many, ObamaCare just isn’t worth it, even for many of the 84% who get insurance subsidies. The plans typically feature sky-high deductibles. As the New York Times reported, even if the coverage is cheap, that’s leaving “some newly insured feeling nearly as vulnerable as they were before they had coverage.” Why bother paying even heavily subsidized premiums?
There’s also a built-in incentive to cancel plans before year is out because of ObamaCare’s 90-day grace period, which lets people getting subsidies keep coverage for three months if they stop paying premiums. Plus, the mandate tax penalty only kicks in for those who’ve been without insurance for three months or more. ObamaCare guarantees they can get their coverage back the next year — without making good on their unpaid premiums.
Then there are those who’ve learned to game the system — buying insurance midyear when they have big health care expenses, and then dropping it once the bills are paid. (The administration is trying to crack down on this.)
Presumably some drop ObamaCare plans because they get better coverage somewhere else. Still, since the healthier are more likely to drop out, the ObamaCare risk pool gets sicker, which will add upward pressure on premiums.
There’s little reason to think ObamaCare will fare any better this year — particularly since premiums and deductibles shot up — which means the 12.7 million signups the White House cheered about last month will probably dwindle to less than 10 million by the end of 2016.
When you consider that there were 15 million people who were buying insurance on their own before ObamaCare, that’s a paltry number.
