Will Obamacare Prove to Be a Disappointment for Those Who Need It Most?

It's been a long road coming, including two full months rife with technical glitches on the state and federal side of Obamacare's health exchanges, but the new health-care reform law is now firmly in place, and through the first week of its implementation, everything appears to be running smoothly.

Although we likely won't have firm state-by-state data until next week from the Department of Health and Human Services, I'd call it a pretty conservative estimate that more than 2 million people signed up for health insurance over the past three months, right in time for the insurance coverage cutoff date of Dec. 24, in order to be covered by Jan. 1, 2014.

Still, this figure is pacing well below projections from the HHS, which had forecast 7 million paying enrollees by March 31, the final day to enroll for health insurance coverage without violating the individual mandate in 2014.

Source: White House on Flickr.

When speculation gives way to implementation, perceptions change
Much debate over the past couple of years has been given to who Obamacare would benefit the most, and who would suffer the greatest. Let's face it, no law benefits everyone, and there's bound to be higher costs involved for some groups along the way in order to pay for the complete overhaul of our health-care system. What's interesting, though, is that speculation versus implementation can completely change your perception of who benefits and who doesn't from this controversial law.

For the past couple of years, much emphasis has been placed on the undue burden that middle-class, young adults, and upper-income earners would come to bear from Obamacare. To some extent, this has remained the case, as with young adults who are being counted on by insurers to enroll and balance out the higher medical costs associated with elderly and terminally ill patients.

However, upper-income and middle-class consumers haven't been suffering to the degree that opponents of the law would have projected. Some of that could be pinned on a recovering U.S. economy, which has left consumers with more disposable cash in their pockets. The other often overlooked factor is that while Obamacare itself may be overwhelmingly disliked -- just a 35% favorability rating compared to a 62% disapproval rating according to the latest CNN/ORC International poll -- the desire to have health insurance is overwhelming among upper-income and middle-class citizens. In other words, the ideal for reform is alive and well, and it wouldn't surprise me one bit if many of the new enrollees are middle-class Americans.

Low-income individuals and families draw the short straw
Ironically, the subgroup that I feel could be left out in the cold by Obamacare is lower-income individuals and families -- the subset I originally expected to benefit the most.

Don't get me wrong, some locales are going to work out perfectly for low-income individuals and families. Traditionally Democratic states such as California, New York, and Washington, which have welcomed the expansion of their Medicaid programs with open arms, are going to be able to use federal assistance generated through taxation (think the medical device excise tax and surtaxes on investment income for upper-income earners) to help lower-income individuals who can't afford health care on their own.

Unfortunately, around half of the nation's states didn't agree to expand their Medicaid programs, and as a result, millions of low-income citizens are left in health insurance limbo. Before you go berating the states that chose not to expand their Medicaid programs with what was essentially free federal assistance on the table, keep in mind that starting in 2016 and running through 2022, the federal government will scale back its portion of Medicaid cost-covering in participating states from 100% to 90%. In other words, nine years from now, these states contended that they would be paying a considerably higher and potentially unsustainable cost to cover lower Medicaid-eligible people and families.

Although these lower-income individuals are exempt from the individual mandate penalties, Obamacare's beefed-up benefits requirements have dramatically boosted premiums for lower-tier insurance packages, all but ensuring lower-income citizens are priced out of the market. Coupled with half the nation refusing to expand their Medicaid program, including Texas, which is home to the largest number of Medicaid-eligible citizens, lower-income individuals may have drawn the short straw once again.

How this could be bad news for your portfolio
If Obamacare proves of little help to a majority of lower-income individuals in this country, it could portend bad news for select insurers and hospital providers who had been counting on strong enrollment figures.

Aetna (NYSE: AET  ) and CIGNA (NYSE: CI  ) , which spent $5.7 billion and $3.8 billion on the acquisitions of Coventry Health Care and HealthSpring, for example, could find that those purchase premiums were far too high in order to move into the government-sponsored health insurance market. WellPoint (NYSE: ANTM  ) , even though it ponied up $4.5 billion for Amerigroup, enjoys the privilege of operating in some of the top-performing state exchanges, such as California's. That alone should save it from poor results while Aetna and CIGNA may struggle to meet Wall Street's expectations.

Other insurers, which focused on lower-income households long before these three national insurers entered the fray, may struggle. In particular, Centene (NYSE: CNC  ) , which operates in a number of states that chose not to expand their Medicaid program, could be leaving a lot of potential members on the table because of Obamacare's broadened minimum benefits provisions.

Finally, hospital operator Tenet Healthcare (NYSE: THC  ) may see minimal positive impact from Obamacare relative to its peers since many of its hospitals are operated in states that aren't expanding Medicaid. In other words, patients that didn't have health insurance because of their income previously still probably won't, and those who did have health insurance still likely do. This means the percentage of revenue that Tenet writes-off as uncollectable each year because of uninsured and underinsured people is unlikely to budge much.

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  • Report this Comment On January 08, 2014, at 3:39 PM, Zachary7398 wrote:

    I am just taking a guess, pure speculation - the writer of this article has way too much kool-aid.

    The poor lose out but the he wouldn't be surprised if many of the new enrollees are middle has he been paying attention at all to the number of Medicaid sign-ups? The number of people signing up for plans that are subsidized? Is anyone in that exchange actually paying the full amount on their own? I do enjoy the delusional visions, they are funny, unrealistic, but funny.

  • Report this Comment On January 08, 2014, at 5:04 PM, monza1 wrote:

    I quote "upper-income and middle-class consumers haven't been suffering to the degree that opponents of the law would have projected". That's because these people have jobs and their employer coverage has not been affected yet by Obamacare. Wait a year for the full mandate on employers' plans and check again.

  • Report this Comment On January 08, 2014, at 5:13 PM, vet212 wrote:

    It has already proven to be a disappointment to those who need it most----Democrats like oh Harry Reid Nancy Pelosi Barak Obama-------------- need I say more

  • Report this Comment On January 08, 2014, at 5:25 PM, mrcgregory wrote:

    Everyone but the rich and the politicians lose out.

  • Report this Comment On January 08, 2014, at 5:48 PM, PaulPhoenix wrote:

    No one benefits from this in the long run.

    The Dems that voted for it will lose their next elections.

    The very poor will end up getting free care (which is technically free already) but will be far substandard than the ER of the past.

    The middle class will have to pay much more for way worse car and many will lose their jobs.

    The American economy will decline due to this massive tax. This will even trickle up and hurt the wealthy and insulated.

    But hey, whatever, YAY communism!

  • Report this Comment On January 08, 2014, at 5:58 PM, StockBeast wrote:

    Sean Williams .. what planet do you live on?

    The number of people signing up is AHEAD of the numbers expected .. yes AHEAD ...

    Mass. - RomneyCare serves as the best example .. the number of signups goes up EXPONENTIALLY

    and signups rose at a faster rate than the RomneyCare plan in Mass.

    Your point about ObamaCare not helping low income people because Republican governors decided to screw their constituents because their miffed at democrats for taking their plan would make it republican governors who hurt low income families in their state ... Right? that is what you said in the article

  • Report this Comment On January 08, 2014, at 6:02 PM, StockBeast wrote:


    Why are DC republicans so angry at Obama for the ACA ?

    because the ACA was the REPUBLICAN alternative to Single Payer which democrats really wanted ...

    So all of you drinking in the DC conservative think tank propaganda about communism, etc. are making fools of yourselves .. hmmm .. I guess we are on the correct website for looking like fools

  • Report this Comment On January 08, 2014, at 6:11 PM, SocialismNOT wrote:

    With the huge deductibles, I think that I'm going with a healthcare discount network. is looking better and better to me.

  • Report this Comment On January 08, 2014, at 7:10 PM, mrtown wrote:

    I have a childhood friend who had a massive heart attack on Oct 11th 2013. He is a tow driver, $250 taking home per week, No insurance. I looked in many directions and they all pointed to I applied in late October! I have never been able to complete the online app. So I have called. Maybe I have spoke with 8 agents and not one could get me further into the app but said they would call me back on agreed upon dates and times. "Not one called me back". He has been in the hospital 2 times for a total of 5 weeks, since October 11th. This was an on the job heart attack. I filled forms out for Workers Comp, State Disability. says he qualifies for medi-cal. Medi-cal says it takes 30 days for an evaluation... "REALLY" Today I sent a letter to Boxer, and channel 7 News! Everything he has lived on since he's been home has been donated. OBAMA has really pushed us into a very uncomfortable position and that UNDERSTATED!!

  • Report this Comment On January 08, 2014, at 7:21 PM, erini wrote:

    Yes, Republican states e.g. Texas on purpose declined the expansion of Medicare, to prevent people from benefiting from Obamacare. GOP would do anything to put Obama down, even on the expense of the health and well being of the most vulnerable. GOP hate the thought that someone could be happy with Obamacare. They put millions of $$$ to prevent people from being covered by a health insurance, the insurance that ALL civilized world provides to every citizen, but US.

  • Report this Comment On January 08, 2014, at 7:31 PM, countusin2 wrote:

    what Obamacare really is about is Hospitals want to get paid for every patient. Currently, their are people who just can't afford to pay or can't pay enough.

    They believe if they can force everyone to have insurance they will never have another unpaid bill...

    their greed is without limits. Given a choice hospitals

    would chose that patients have no deductibles at all and the insurance companies would pay anything they asked...

    in the end, doctors and hospitals will go broke because the deductibles will be so high, no one will use them anymore....

  • Report this Comment On January 08, 2014, at 7:59 PM, jmgconsultants wrote:

    It will be very disappointing because of the cost for their coverage. Most thought it would be free but instead it will cost them thousands before their coverage even begins.

  • Report this Comment On January 08, 2014, at 8:00 PM, tlcjonson wrote:

    Compared to the way our health system ran before Obamacare the answer to this obviously heath insurance corporation sponsored article is 99% of ordinary citizens benefit with a health care program that has not even been fully implemented and already has dramatically reigned in health care costs. Health insurance corporations enjoyed literally risk free and highly profitable business model that shifted most of the risk to individuals and gave the big corporations a "Get out of jail" card because they could cancel coverage and limit their payout if you get sick. Health insurance hate having to offer substantial coverage and actually bear the risk. They also hate that they have more competition in the market place and they have to submit to increased government scrutiny. Health insurance corporations are not in love with the government telling them how much of consumer dollars they get to keep to cover their costs and profitability. The program is not fully implemented and it has already reduced health care costs. With the additional competition I predict health care cost will contine to fall to levels we have never seen in the US. In Canada a family of four or more pays only $49/month and they throw in longterm care for seniors for nothing.

  • Report this Comment On January 08, 2014, at 8:58 PM, govlies2 wrote:

    obama is a disappointment obamacare is a scam yo make billions offf of hard workung American people. He should be Impeached and put in prison along with everyone involved. Alot of our gov is behind him and his communist ways! they want to control us just like hitler ! Hitler done the same thing obama is doing using kids to disarm us telling people he will take care of their healthcare and he did alright he put them in pens and then in gas chambers.

  • Report this Comment On January 08, 2014, at 9:26 PM, 3dognight wrote:

    Well. duh. Of course it will be a disappointment because it's dysfunctional, a sham, a scam and the socialization of all medicine in the USA.

  • Report this Comment On January 09, 2014, at 12:08 AM, StockBeast wrote:

    ObamaCare = RepublicanCare ...

    DemocratCare = SINGLE PAYER ...

    So if ObamaCare fails ..

    another Republican idea fails

    Why should we listen to another republican idea again?

    The republican idea that derivatives should not be regulated caused the 2008 banking depression

    The Bush tax cuts failed .. they are the biggest part of the federal deficit each year but you don't hear republican voters yammering to repeal them

    The list of failed republican ideas is endless

  • Report this Comment On January 09, 2014, at 12:11 AM, StockBeast wrote:

    I live in Washington DC ..

    I signed up on the DC exchange on Dec 24th ..

    My application was complete in 30 minutes

    Get off your duff and sign up today .. it's worth it

  • Report this Comment On January 09, 2014, at 8:17 AM, horticultor wrote:

    Obamacare will prove to be a disappointment for everyone. Yes, everyone. Stand and watch.

  • Report this Comment On January 09, 2014, at 8:39 AM, Mathman6577 wrote:

    StockBeast: You are watching too much MSNBC and listening to too much NPR. As Steve Jobs said you are under a "reality distortion field". The ACA was NOT a GOP plan at all. ZERO voted for it. The ACA was hatched by socialists like Nancy Pelosi and company. Any single-payer plan would never have passed (and never should). The GOP wanted tort reform for one thing as a way to combat "high" healthcare costs. Of course the trial lawyers associations lobbied Congress to keep that away. And it is not up the GOP to fix the ACA problems.

  • Report this Comment On January 09, 2014, at 8:42 AM, AnotherNobody wrote:

    For everyone, I fear. It's been said that Walmart provides better coverage for a hell of a lot less.

  • Report this Comment On January 09, 2014, at 8:47 AM, Mathman6577 wrote:

    AnotherNobody: Don't tell that to the Wal-Mart bashers in here (and Costco supporters that claim it is a much better place to work than WMT).

  • Report this Comment On January 09, 2014, at 10:29 AM, cupera1 wrote:

    The only 7 million goal made by Obamacare are the number of health care policies have been canceled in 2013. Obama has claimed 2.1 million have signed up in by Jan 1st. They have inflated their numbers by including the individuals that are getting Medicaid, running 80% to 90% since October 1st. Of the people that are getting Obamacare only half have paid anything to get their policy. Many of them that have gone to their doctor or hospital they have been turned away because there is no card or proof that they have ANY POLICY AT ALL.

  • Report this Comment On January 09, 2014, at 11:12 AM, StockBeast wrote:

    Mathman .. JD Georgetown .. I work for the US Senate ..

    The ACA was the republican alternative to HillaryCare in the 90s ... It is a FACT

    That is how it became RomneyCare in Massachusetts .. SAME BLUEPRINT ..

    Those of us who do not live on the Fox News Plantation know this fact

    The ACA is a REPUBLICAN idea created at the Heritage Foundation .. endorsed by Newt Gingrich

  • Report this Comment On January 09, 2014, at 11:15 AM, StockBeast wrote:

    Cupera .. Thanks for giving us your conspiracy theory ...

    Do you know how long the term of everyone's health insurance policy is ? it is a FIXED amount of time

    I will tell you .. EVERYONE's health insurance policy gets cancelled every year .. it gets rolled over into a new policy

    Read the FINE PRINT in your policy .. you would know this

  • Report this Comment On January 09, 2014, at 11:26 AM, StockBeast wrote:

    Republicans/Conservatives .. the LYING has to stop

    Reality has proven you wrong .. so shut it

  • Report this Comment On January 09, 2014, at 11:49 AM, computerfinch wrote:

    stockbeast, republicans unanimously rejected obamacare. It doesn't matter whether it was a republican idea or not (an idea they've rejected now, with romneycare being a different beast and the one exception), the democrats built it, ignored republicans save for a few cosmetic changes they requested and then pushed it through against majority sentiment and despite unanimous - let me repeat that word, unanimous - republican rejection.

    succeed or fail, the dems own it. but it's funny how you try to lay the democrats actions on the republicans.

  • Report this Comment On January 09, 2014, at 12:49 PM, Mathman6577 wrote:

    Computerfinch: He is taking a play out of the Obama adminstration book. Distract, blame others, and divide the country into little pieces. (Don't forget: he is a lawyer and works for the US Senate.)

  • Report this Comment On January 09, 2014, at 12:56 PM, scottgreene wrote:

    What are you talking about when you say it appears that everything is running smoothly??

    Have you talked to any hard-working middle class American who had their insurance cancelled and now their premiums and deductibles have more than doubled???

    These people had perfectly good plans until Obamacare decided to mandate that a 60 year old grandmother needs to pay for maternity coverage.

    Do you even know what is in Obamacare?

    Obama lied when he said you could keep your health plan and doctor

    You need to wake up!

    Millions of hard-working middle class families who have been financially devastated by all this mandated Obamacare coverage.

  • Report this Comment On January 09, 2014, at 1:08 PM, CounselorREB wrote:

    In other words, the ideal for reform is alive and well, and it wouldn't surprise me one bit if many of the new enrollees are middle-class Americans.

    The middle class will only enroll because they are afraid of government reprisal. I predict that within 3 payments, most will stop paying due to lack of, and I quote....(look in the quote marks)

    However, upper-income and middle-class consumers haven't been suffering to the degree that opponents of the law would have projected. Some of that could be pinned on a recovering U.S. economy, which has left consumers with more "disposable cash in their pockets".

    Lastly, the economy is not getting better for the middle class, They do not have disposable cash!!!

  • Report this Comment On January 09, 2014, at 1:26 PM, Scottilla wrote:

    If they buy the cheapest plans they get the least coverage. It's as simple as that. The only way people will be satisfied is with a proven coverage that has been around for almost 50 years. Medicare.

  • Report this Comment On January 09, 2014, at 4:51 PM, StockBeast wrote:

    computerfinch ....

    Yes .. because democrats pulled a surprise instead of offering Single Payer like they did in the 90s .. they ran with RomneyCare ... the model for the ACA

    and republicans were left with ZERO alternative plan

    They had ZIP politically ..

    Republicans had started a trend of opposing their own plans since Obama/democrats were going to get the credit for passing them

    It showed republicans are only in DC to get a govt paycheck and nothing else

  • Report this Comment On January 09, 2014, at 4:53 PM, StockBeast wrote:

    scottgreene .. No one had their policy cancelled

    No One ..

    Do you know how long your insurance policy lasts?

    I bet you have never read the fine print .. it lasts 1 yr

    ONE ...

    and it rolls over into a NEW POLICY the next year if you pay the premiums

  • Report this Comment On January 09, 2014, at 5:01 PM, StockBeast wrote:

    scottgreene .. Wow .. are you really that naive?

    Insurance is about SHARED cost ..

    Why do I need to pay for maternity costs as a single man?

    the answer is because I need

    The piecemeal approach to buying insurance for specific procedures is a childish view of the world

    Do you really think you could figure out what what procedures you might need or an actuarial who is trained to do it ? I'm going with the actuarial ..

    the avg person tends to be an idiot and not think of every situation they would need medical care .. and in the modern world weird S happens that we could never have imagined ..

    It time to wake up son .. there is a reason that the experts need to figure this stuff out for you

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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