Five Reasons the Exchanges are Failing

Over 8 million Americans and 300,000 Pennsylvanians signed up for health insurance on the Obamacare exchanges according to data released by the Department of Health and Human Services (HHS) yesterday. Given the rocky roll-out of, that number is unexpectedly high. But enrollment is just one part of the story. Here are five reasons why the exchanges are failing:

  1. Enrollment is no guarantee of health care. Since HHS only tracks people who have selected a plan, we don’t know how many possess an insurance card that will give them access to affordable and quality care.
  2. To receive care, enrollees have to pay their premium. The latest estimates in Pennsylvania show about 19 percent of enrollees have not paid. Nationally the rate is higher, around 33 percent. And past surveys show enrollees who were previously uninsured are less likely to pay their premiums than people who lost their plan under Obamacare. Perhaps most alarming is that a whopping 90 percent of young adults haven’t paid their premiums. Many young adults signed up for insurance at the end of March, but this high rate of unpayment should still worry the administration.
  3. The exchange population is sicker and older than expected. A survey of prescription usage found exchange enrollees are more likely to submit claims for HIV drugs, Hepatitis C and seizure medications. Only 28 percent of exchange enrollees were under 35 (30 percent in Pennsylvania). That is far short of the 40 percent target set to avoid future premium hikes.
  4. Premium hike rumors abound. Last month, the CEO of the Cleveland Clinic warned rates will increase for most enrollees, others say premiums will double. If premiums spike, many could choose to drop coverage and wait until they are sick to seek insurance.
  5. Access to care is substandard. Numerous regulations and the pressure to keep costs low have resulted in plans with narrow networks and widespread confusion over which doctors and prescriptions are covered. Consider cancer patient Catherine Blackwood who was told her new insurance would cover her life-prolonging cancer medication. Weeks later, her insurance company refused to pay the $14,000 tab.

The real measure of the ACA’s success is not the number of exchange enrollees, but the declining number of uninsured Americans. In March 2010, the CBO projected a 19 million reduction in the number of uninsured in 2014. Last month, a Rand survey estimated only one third of the new enrollees were previously uninsured, meaning 1.4 million gained coverage.

The exchanges have accomplished little more than spending billions to migrate the insured from the individual market to an Obamacare marketplace with more restrictions on care.