The Obama administration has spent the last several months telling reporters that the benchmark by which to measure Obamacare’s success is 7 million new exchange enrollees. That number comes from the Congressional Budget Office’s most recent baseline estimates of how the law will affect spending and taxes as well as enrollment in public programs and private insurance.
But focusing just on enrollment in the exchanges is misleading, as many millions of individual-market participants are now discovering. They are receiving cancellation notices from their current insurers and are being told that they need to pick their coverage for next year from among the Obamacare-compliant plans offered in and outside of the exchanges. Some of these individuals will make the switch and buy new coverage, assuming the Obama administration is able to make Healthcare.gov minimally functional at some point. But there also will be some current individual-market participants who don’t sign up for an Obamacare plan and go without insurance for some or all of 2014. The interesting number, then, is not gross enrollment in the exchanges, but the net number of newly insured Americans.
The picture is complicated further by the fact that the law encourages the states to vastly expand Medicaid enrollment, covering residents up to 138 percent of the federal poverty line, by offering full federal financing of the expansion for a three-year period (the law originally attempted to compel states to go along with the expansion with full withdrawal of federal funding for non-compliant states, but the Supreme Court struck that down). The Obama administration and the law’s congressional architects are counting on the Medicaid expansion to vastly reduce the ranks of the uninsured.
Of course, these changes, along with Obamacare’s numerous mandates and rules, will also alter coverage in employer plans and the existing individual market. Getting the full picture of what Obamacare will mean for future insurance-enrollment rates therefore requires looking at what will happen in each of the insurance settings.
At the time of enactment, CBO estimated that the net effect of the various Obamacare provisions would be 10 million new enrollees in Medicaid in 2014, 8 million enrollees in plans offered on the exchanges, 4 million new enrollees in plans sponsored by employers, and a reduction of 2 million people in the non-exchange individual insurance market. The net effect was an estimated reduction in the ranks of the uninsured of 19 million in 2014.
The Obama administration relied heavily on this CBO cost estimate to argue that the law would dramatically expand insurance coverage even as it also reduced projected federal budget deficits, in the short and long term. The CBO estimate was also instrumental in rounding up the final votes in favor of passage of the legislation in Congress. A strong case can be made that the numbers in the CBO cost estimate were what was promised to the American people, and therefore represent the benchmark against which Obamacare should be assessed.