Whether or not Obamacare has been a success really depends on who you ask.
Lower-income and select middle-income families have been big beneficiaries of Obamacare, thanks in part to the expansion of Medicaid in 31 states, as well as the Advanced Premium Tax Credit (APTC) and cost-sharing reductions (CSRs), which have made health insurance more affordable.
In 2016, the average monthly premium with an APTC across the country was just $113, compared to $407 a month without this financial assistance. Similarly, CSRs help consumers and their families who earn between 100% and 250% of the federal poverty level cover the costs of copays, coinsurance, and deductibles.
But if you ask the nearly 2 million people enrolled in Obamacare plans who make too much for subsidies, then you'll hear a different story. As we head into 2017, premium costs appear to be soaring, which means the burden of meeting monthly premium payments is rising for those not covered by subsidies. In addition, the cost of being uninsured has also risen. The Shared Responsibility Payment has increased from the greater of $95 or 1% of modified adjusted gross income (MAGI) in 2014 to the greater of $695 or 2.5% of MAGI in 2016.
But the real measure of Obamacare's success won't be determined by public opinion. It'll be based on statistics -- and for the time being, the data is conflicting.
One glaring statistic suggests Obamacare is failing
On one hand, Obamacare wound up enrolling about 12.7 million people by the end of the enrollment period for 2016. This doesn't even count the near-equal number of people who've enrolled in Medicaid in the aforementioned 31 states. Combined, these enrollees have pushed the uninsured rate in the U.S. to 9.1% -- the lowest rate ever recorded, according to the Centers for Disease Control and Prevention.
But there's also a statistic that suggests Obamacare could be failing big-time.
In late May, InHealth Mutual, one of Obamacare's 23 approved healthcare cooperatives, or co-ops, announced that it was closing its doors due to excessive losses. InHealth Mutual served nearly 22,000 customers in Ohio, and its closure means these Ohioans now have 60 days to find a new insurer.
InHealth Mutual is not alone. In fact, it became the 13th of Obamacare's 23 healthcare co-ops to announce that it was shutting its doors due to excessive losses. The loss of these co-ops is particularly devastating because the co-ops were designed to be run by the people, for the people, and to increase competition by offering a competitively low monthly premium. The failure of InHealth Mutual, and the other 12 co-ops before it, suggests that the program itself may not be sustainable -- or, worse yet, affordable. Adding salt to the wound, little to none of the $1.24 billion in federal start-up money given to these 13 co-ops is likely to be recovered.
Furthermore, an analysis of financial documents for the remaining co-ops obtained by The Daily Caller News Foundation suggested in April that eight of the remaining 11 co-ops could close their doors before the end of 2016. Ohio's co-op was one of the eight named, meaning there could be an additional seven co-ops on shaky financial ground. Daily Caller noted that the eight co-ops it perceived to be in danger as of April 2016 had burned through more than half of their assets during 2015 -- assets that were supposed to last 20 years, according to the terms of the federal funding program.
Insurers at the opposite end of the spectrum are struggling, too. UnitedHealth Group (NYSE:UNH) is the largest insurer in the country, and in 2016 it's offering Obamacare plans in 34 states. However, the insurance giant announced earlier this year that it was on track to lose approximately $500 million from its Obamacare plans. These losses prompted UnitedHealth to pull out nearly all of its 34 markets in the upcoming enrollment period for 2017. In the markets it chose to remain in, it's asking for huge premium increases -- including New York, where it's requesting a 45.6% premium hike.
Is Obamacare failing?
If low-cost insurers and the nation's biggest insurer can't seem to figure out Obamacare after two-and-a-half years, that's a problem. But it doesn't necessarily mean that Obamacare is failing.
The approximately 85% of Americans covered by an APTC tend not to feel the effects of premium inflation, since it's usually only a few dollars at a time. Because the majority of enrollees are covered by subsidies, the program has a healthy dose of enrollees with which to tempt insurers to participate -- especially insurers eager to gobble up consumers with government-sponsored assistance, such as Centene and Anthem.
Yet there are clear flaws in the program that need addressing. Obamacare's young-adult enrollment remains subpar, even with the surge in young-adult enrollment we witnessed from 2015 to 2016. Young adults are critical to the success of insurers, as they're generally healthier and less likely to need medical care. In other words, the premium dollars of young adults help cover the costs of treating older and/or sicker patients. And based on a study from the Blue Cross Blue Shield Association, Obamacare enrollees are a sicker and costlier bunch to begin with.
The failure of the "risk corridor" to adequately incentivize insurers is another potential issue. The risk corridor was designed to create a financial safety net for insurers losing excessive amounts of money. This funding was to be provided by insurers making excess profits. Unfortunately, the risk corridor wound up being brutally underfunded. Of the $2.87 billion in funds requested by insurers, just 12.6% was paid out. Without this financial incentive, competition on the marketplace exchanges may struggle to materialize, which can hurt the consumer by reducing competition and increasing plan prices.
Lastly, the pricing of insurance plans remains a concern. If premium inflation pushes into the double digits, it'll effectively lock the uninsured out of purchasing insurance, and it could push some of the non-subsidized insured to the sidelines.
It looks as if Obamacare could be nearing a turning point, and where it heads from here is anyone's guess. What do you think: Is Obamacare a success, or has it begun a downward spiral?