On November First, Obamacare’s exchanges will open for business, and Americans without employer-sponsored or individual coverage will be able to select their health insurance plans for the upcoming year.
The timing makes sense. Open enrollment follows the scariest day of the year — Halloween.
And the ensuing two months will be even more frightful than All Hallows’ Eve, featuring hair-raising costs, ghastly coverage networks, and insurance exchanges headed toward a death spiral.
The Vanishing Enrollee
Already, the Obama administration seems to have made millions of potential enrollees “disappear.” In June, the Congressional Budget Office predicted that 20 million Americans would enroll in coverage through the exchanges next year.
Now, the administration is holding out hope that 10 million people will sign up — only 900,000 more than it expects to be enrolled at the end of this year. Health and Human Services Secretary Sylvia Burwell has stressed that this year’s open enrollment is “going to be a bigger challenge.”
Scaring You Cent-less
High prices for inadequate coverage are scaring people away from the exchanges.
Minnesota’s largest insurer — BlueCross BlueShield — will increase rates by an average of 49 percent next year. Tennesseans enrolled in their state’s largest insurer will pay 36 percent more on average. Folks in Oregon will endure a rate hike of 26 percent.
In almost one-third of the states, premiums will increase by more than 20 percent.
Even if customers manage to switch to plans with lower premiums, Obamacare has a sneaky little trick up its sleeve — horrifyingly high deductibles.
Deductibles for “bronze” plans — often the cheapest ones on the exchanges — could cost individuals as much as $6,850 next year. The deductible for the second-cheapest plan in Seattle will rise 175 percent to $5,500. More generous, mid-level “silver plans” in Indiana feature deductibles of $6,500.
While these prices are top-dollar, the coverage they provide is not. Thanks to Obamacare’s many mandates, plans are loaded up with benefits that patients may not want or need — like substance-abuse treatment or maternity care. Each additional mandated benefit drives up the cost of a policy.
At the same time, these plans skimp on the things patients care about most, like robust provider networks. A June report from the Robert Wood Johnson Foundation discovered that one in three exchange plans had “small networks” — or plans that included at most 25 percent of the doctors in the area. One in ten plans included fewer than 10 percent of an area’s doctors.
The result is unhappy customers. According to a recent survey by consulting firm Deloitte, two of every three enrollees are dissatisfied with their coverage.
With Obamacare policies costing an arm and a leg, many people will be tempted to sit out this enrollment season — again.
During the last enrollment period, 10.5 million eligible Americans declined to sign up for coverage through Obamacare. Almost half were young adults aged 18-34.
Obamacare needs these young people to ward off the dreaded insurance “death spiral,” where older, sicker, and costlier patients outnumber the healthy. When that happens, insurers have to raise rates further to cover the costs of treating all their older enrollees. That drives even more young, healthy people out of the insurance pool — and the process repeats.
So the administration is dispensing with the treats it’s historically used to promote Obamacare — celebrity endorsements, concerts, branded merchandise. This year, it’s opting for tricks, in the form of higher penalties for going without coverage — $695 or 2.5 percent of taxable income, whichever is greater.
The penalty will surely take a bite out of Americans’ wallets. But it will still be cheaper than the average mid-level silver plan, which is estimated to cost nearly $450 a month.
And it doesn’t change the fact that for many young people, Obamacare is simply too expensive. Often, they’re not choosing between money for health coverage and money for beer — but between paying their insurance premiums and paying their rent.
As Obamacare enters its third enrollment season, it’s spookier than ever. Unfortunately, it will take more than a silver bullet or a wooden stake to stop this monster.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The Cure for Obamacare (Encounter 2013).