How Is Obamacare Doing?

You know that Obamacare is having a really bad year when Paul Krugman starts to concede that it “has hit a few rough patches lately.” To be sure, Krugman still believes that Obamacare is working, but even he must acknowledge that it is “an imperfect system” and that “the run of unexpectedly good news for Obamacare has come to an end.” That’s one way to spin it.

Essentially, the people signing up for an Obamacare plan are the people getting it for free. A recent report from the Robert Wood Johnson Foundation and the Urban Institute looking at enrollment so far found that almost all Americans with incomes of between 100 and 150 percent of the poverty line (who receive the biggest subsidy) sign up for exchange plans, but less than a third of those with incomes between 200 and 300 percent of the poverty line do, and just 13 percent of those with incomes above 300 percent of the poverty line (who receive little or no subsidy).

There’s bad news on the cost front as well. Obamacare has benefited from a general slowdown in the growth of health-care costs that started in 2003. Lower overall health-care costs have helped keep both subsidy costs and premiums lower than they would otherwise be. Americans have complained about rising premiums, but it could have been worse. And it might yet be. Last year, national health-care expenditures rose by 5.8 percent (4.5 percent per capita), the fastest rate of increase since 2008. Insurance premiums are already headed higher. Exchange-based premiums are expected to rise by about 13 percent on a weighted-average basis, although some states are likely to see much higher increases. Competition in the insurance market is disappearing as well. Even more ominously, the United Health group has announced that it may stop offering insurance on the Obamacare exchanges.

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