3 Pictures of Obamacare: The Good, the Bad, and the Ugly

Is Obamacare good, bad, or ugly? These pictures show all three faces of the controversial health reform legislation.

Jan 22, 2014 at 1:55PM

Passions run deep when it comes to the Affordable Care Act, commonly known as Obamacare.

Supporters look for every positive sign that the health reform legislation is achieving its goals. Opponents point out every way that the implementation of the law isn't going well. Last week's enrollment numbers gave at least a little bit of ammunition to both camps. Here are three pictures of Obamacare from that data -- the good, the bad, and the ugly.

The good
It isn't too difficult to find the best trend from the Obamacare enrollment figures. Many more Americans have signed up for health insurance in the last few weeks than did in the first couple of months after the launch of the online marketplaces.

Obamacare Good Picture

Source: U.S. Department of Health and Human Services. 

The changes made by the White House, including giving the reins to one lead contractor, UnitedHealth Group's (NYSE:UNH) Quality Software Services, seem to have paid off. While some problems remained, the federally operated HealthCare.gov website performed much better than it did during the first two months of operation. UnitedHealth's unit picked up another $50 million for its part in the remedial work -- not bad money, but only a drop in the bucket compared to the $122.5 billion it made over the last 12 months.

However, this picture isn't quite good enough at this point. Back in September, Health and Human Services Secretary Kathleen Sebelius stated that "success looks like at least 7 million people having signed up by the end of March 2014." Even adding the nearly 957,000 individuals selecting a plan through state-operated exchanges to the 1.2 million total from HealthCare.gov, there's a long way to go to meet that goal.

The bad
One Obamacare enrollment statistic that hasn't received as much publicity relates to the gender gap. Many more females are signing up for insurance than are males.

Obamacare Bad Picture

Source: U.S. Department of Health and Human Services. 

The population split of the total population of the U.S. younger than age 65 is roughly 50% male and 50% female. That's not what we're seeing so far with Obamacare enrollment. Nearly 10% more women are signing up.

What's bad about this picture? Not much, necessarily -- unless you're an insurance company. Females tend to incur higher medical costs than males. Prior to Obamacare, insurers accounted for this by charging higher premiums to women than they did to men. With the health reform legislation, though, insurers must charge the same premiums regardless of gender.

We could be simply watching the law of demand covered in freshman economics courses work its magic. Insurers, forced to charge the same amount for men and women, increased the prices for men to subsidize the higher costs for women. As the price for men went up, demand likely went down. 

The problem for insurers is that they need those men to buy insurance. Instead, they're covering more women with the corresponding likelihood for higher medical costs. And higher medical costs mean bad news for health insurance companies.

The ugly
While higher medical costs from more female members might be bad news for insurers, the truly ugly news stems from another demographic difficulty. Fewer younger Americans are signing up for plans on the Obamacare websites than anticipated.

Obamacare Ugly Picture

Source: U.S. Department of Health and Human Services. 

Insurers hoped that around 40% of enrollees would be between the ages of 18 and 34. Instead, only 24% of total Obamacare sign-ups comes from that target age range. The heaviest turnout for enrollment is coming from the demographic that insurers really covet the least -- Americans age 55 and over.

In this case, age is really just a proxy for health status. Younger individuals are presumed to be healthier (and less costly for the insurer) than older individuals. Granted, that's not always true, but with large enough population groups it's a reasonable premise.

The bottom line is that without enough younger Americans signing up, insurers will lose money on Obamacare. Humana (NYSE:HUM) has already issued a warning that its enrollment mix will be "more adverse than previously expected." The large insurer stuck with its earnings outlook for 2014, though, counting on stronger Medicare enrollment to offset the potential losses from Obamacare.

Considering that the Oxford Dictionary named "selfie" as the word of the year in 2013, it's probably safe to say that the picture Americans care most about includes themselves in it. How do you fit into these three pictures of Obamacare?

You could be among those gaining insurance through HealthCare.gov as shown in our "good" picture. If so, depending on your age and where you live, you could be paying less than you did before. Unfortunately, you could also be paying a lot more than you did in the past. For 79% of you in this picture, the federal government is providing some financial assistance.

If you're in the smaller slice from the "bad" picture (males selecting a health plan), odds are you're paying more for health insurance than you used to. You might be doing so even if you're in the female part of the picture. Either way, it's likely that you did actually have insurance in the past. According to The Wall Street Journal, as little as 11% of individuals signing up on the Obamacare exchanges were previously uninsured.

Where are you in the "ugly" picture? Assuming you're a taxpayer, you could be on the bottom line. That's because the bottom line is that your taxes help foot the bill for insurers that lose money if too few younger, healthier individuals sign up. Obamacare's "risk corridor" program subsidizes insurance companies' losses with federal subsidies. Whether you love Obamacare or hate it, remember to smile -- you're in the picture.

Click and snap 
Obamacare seems complex, but all it takes is one click and you'll be up to speed on how health reform impacts you in a snap. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This FREE guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers