Cautionary Notes from Obamacare’s High-Risk Pool Debacle
Several stories over the past month have focused on developments in Obamacare’s high-risk pool program for individuals with pre-existing conditions. The Administration has released updated totals of enrollment in the program, and the Government Accountability Office released its own report analyzing the program’s first year of operations.
Two important themes have emerged. First, the low enrollment in the program should serve as some indication that the problem of individuals with pre-existing conditions who cannot obtain insurance, while significant, is not nearly as dire as liberals would suggest. Earlier this year, for instance, the Administration released a report alleging that 129 million individuals had pre-existing conditions and “could be denied affordable coverage.” In reality, however, only about 27,500 individuals were enrolled in the new federal high-risk pool as of June 30 – that’s only .02% of the total number of Americans the Administration claimed suffer from pre-existing conditions. And even the Huffington Post admitted earlier this week that 98% of funds for the risk pool program have not been spent after nearly a full year of operations.
What’s just as interesting are the stories of the people who ARE enrolling in the new federal program. The Huffington Post article discussed one individual with a pre-existing condition who was contemplating abandoning her private insurance to enroll in the government-run program. Despite the fact that the new federal risk pool requires a six-month waiting period – designed to discourage individuals who have coverage now from dropping it – other stories have emerged of people leaving private coverage to enroll in the taxpayer-funded risk pool program.
Unfortunately, these kinds of stories could become all too common in future years, as Obamacare’s coverage expansions come online. Low-income individuals may drop their private coverage to obtain “free” Medicaid funded by taxpayers. Others may look to drop their private individual coverage to receive government subsidies on Exchanges. And the biggest change of all could come when individuals and employers mutually collude to drop health insurance, because both the employee and employer will be better off (even though taxpayers will be on the hook for trillions more in insurance subsidies).
The stories outline above provide a clear indication that the phenomenon of “crowd-out” – that is, individuals dropping private coverage to obtain a taxpayer-funded benefit – clearly exists, and is bound to plague the launch of Obamacare’s insurance subsidies in 2014. After all, one would hardly expect individuals with pre-existing conditions to want to drop their insurance coverage, yet this week’s stories indicate that some are doing just that. And if even the sickest individuals are dropping coverage to obtain taxpayer-subsidized benefits, what leads Democrats to think that everyone else won’t just follow?