What if this is as good as it gets? That’s the question Democrats need to ask themselves about Obamacare. The new law has delivered some benefits: It boosted enrollment in health insurance by several million people. Even if that insurance was largely substandard — since it has come through Medicaid — it provided some financial security for a significant number of people. But the numbers are smaller than had been promised, the law’s regulations have been increasing premiums and deductibles and shrinking provider networks, the law’s co-ops have been failing, the structure of its subsidies has discouraged people from working, and all in all the law remains unpopular.
And the worst may be yet to come. The law was written so that its least attractive features would kick in toward the end of Obama’s presidency, and after it. The Medicare rationing board has yet to come online. The tax on some employer-provided plans — a tax that is, in modified form, defensible, but still has to be reckoned a downside for voters — has not yet been imposed. The tax on the uninsured is already in place, but set to escalate.
Now UnitedHealth Group, the country’s largest insurer, is indicating that the law’s vaunted exchanges may also be seeing their best days. It has cut its earnings projections, citing losses from its participation in the exchanges. Reading between the lines, it appears that the customer base is sicker or more price-conscious than it anticipated — and perhaps too much of those things for participation to be a sustainable business. Health stocks declined after its announcement, suggesting that other companies may also be in this position. What has the industry particularly nervous is that the dynamics of insurance create the potential for a vicious circle: A relatively sick insurance pool leads to higher premiums, which drives the healthier members of the pool out, leading to still higher premiums.
Obamacare Republicans have been strangely mute about for the last few months, reacting more to the press’s conviction that repeal is a lost cause than to any actual voter sentiment. It is true that Republicans cannot simply repeal while failing to make any provision for the people who would lose their health insurance as a result. But the law remains unpopular and several Republicans have proposed ripping out Obamacare’s regulatory heart while protecting those people. What the markets may be telling the party now is that it’s time to go bearish on Obamacare, and bullish on conservative replacements for it.