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The Conservative Case Against Obamacare: A Restatement

7:07 AM, Apr 21, 2014 • By JAY COST
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Since Obamacare “hit” its “enrollment” “target,” Democrats, liberals, and their friends in the press have enjoyed some old-fashioned taunting of Republicans. This would be justifiable if a.) Republicans had destroyed the website that needed fixing or b.) predicted that nobody would sign up for the program in the first place.

Neither condition holds, of course. The website was totally the design of CMS, HHS, and the White House, which are all run by Democrats. Meanwhile, as Michael Cannon argued, it is no big feat to get people to sign up for a heavily subsidized product.

All of this Democratic triumphalism makes it a good time to restate in summary form the conservative case against Obamacare.

For starters, its recent success is grossly overstated.

Eight million “enrollments” is an enormous exaggeration, so much so that you cannot in good faith say that Obamacare “beat” its expectations. In fact, last week the Congressional Budget Office stuck with its most recent prediction of 6 million enrollments:

CBO and JCT estimate that, over the course of calendar year 2014, an average of 6 million people will be covered by insurance obtained through the exchanges. The total number who will have such coverage at some points during the year is expected to be more than the average because some people will be covered for only part of the year.

The 6 million number is not, and apparently never was, the number of paid subscribers arrived at when the enrollment period ended. And why should it be? That has become a politically important number, but from a federal budgetary perspective, a coverage perspective, or an insurer financial perspective, it has no value. What really matters is the annual average.

So, is CBO’s 6 million still justifiable as an estimate? If we take the administration at face value on its monthly enrollment numbers, assume that 90 percent of initial enrollees pay their first month premium, and then a 1 percent non-payment rate thereafter, the annual average for 2014 would be about 5.5 million, and the final enrollment as of December would be about 6.6 million.

It is worth noting on this front that a study from the U.C. Berkeley Labor Center projects that 40 percent of enrollees in Covered California will leave the individual market by the end of the year, either migrating to employment based insurance or Medicaid.

Whether this estimate turns out to be true, or whether California is indicative of the rest of the nation, is beside the point, which is this: The paid enrollment prediction made by CBO and adopted last year by the White House is substantially different than the numbers promulgated by the White House. In reality, the White House has invented a statistic that has no policy relevance whatsoever, and successfully sold it to a credulous press corps frustrated by the website’s collapse and eager for good news. Additionally, as insurance industry expert Robert Laszewski has noted, it would not be all that hard for the White House to compile and release the data relevant to the actual performance of the program. That the White House has not done this, nor has any plans to do so, should tell you everything you need to know.

The most fair assessment of Obamacare, given the data constraints imposed by the president for political purposes, is that the program will probably get in the neighborhood of 6 million paid enrollments on average this year, which is what CBO predicted earlier this year, but is just 67 percent of what the budget scorekeepers predicted would happen after the Supreme Court ruling.

Conservative objection #1: Obamacare has no legitimate funding mechanism.

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