Peak Obamacare? We’re There

The Obama administration has released a report estimating that enrollment in Obamacare will reach only 9.4 million to 11.4 million at the end of 2016. Back in 2010, when the Affordable Care Act was passed, the Congressional Budget Office estimated that exchange coverage would reach 21 million next year (Table 4).

Why the come down? Obamacare has a miserable take-up rate: Few who do not get significant subsidies sign up. Even worse, many of those who sign up at open enrollment cannot afford the premiums and drop out. Indeed, 15 percent of Obamacare beneficiaries who signed in 2015’s open season (which ended in February) were gone by the end of June. (The New York Times has just published interviews with some struggling to pay their premiums and maintain coverage.)

One year ago, I coined the term “Peak Obamacare” to describe this phenomenon. Although the administration’s cheerleaders have celebrated very high Obamacare enrollment during open season, the administration has finally decided to accept reality: We are on the verge of Peak Obamacare.

Vindication for Obamacare’s critics? Well, not yet, I am afraid. The failure of the exchanges does not necessarily create enough pressure to repeal and replace the healthcare “law”. Obamacare exchange beneficiaries are not a politically powerful constituency. They currently amount to only about ten million people, scattered around the country; and given their age and household incomes I would bet they do not have a high propensity to vote.

Also, much of the criticism against Obamacare was that it would crush employer-based benefits. That 2010 CBO analysis figured a small reduction of three million covered by employer-based plans in 2016, versus a future without Obamacare. However, it looks like employer-based coverage is holding up much better than most had anticipated.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.