This commentary originally appeared in the Austin American-Statesman on April 15, 2014.
A last-minute surge in enrollment brought the total number of people who have signed up for health coverage on the Obamacare exchanges to 7.1 million as of March 31, prompting the White House to declare the Affordable Care Act a success and proclaim an end to the debate over repeal.
But a closer look at the administration’s enrollment data suggests the debate is far from over, in part because the exchanges have not been successful in attracting large numbers of uninsured Americans – especially in Texas, which has the highest uninsured rate in the country.
According to the U.S. Department of Health and Human Services, an estimated 2.2 million Texans are eligible for federal subsidies to purchase health coverage, yet in the first five months of open enrollment fewer than 300,000 Texans bothered to sign up.
When the state-by-state enrollment data for March comes out, that total will no doubt be higher, but even if it’s more than half a million, that still leaves about 1.7 million people in Texas who chose not to buy Obamacare insurance.
Even more surprising is that the vast majority of those who did sign up are people who previously had health insurance – either their plans were cancelled because of new regulations, or they found a better deal on the exchanges.
A recent survey by the RAND Corp. found that only about a third of those covered through the exchanges were previously uninsured. That’s not how the law was supposed to work. The Congressional Budget Office estimated that 80 to 90 percent of first-year exchange enrollees would be previously uninsured.
Obamacare was sold on the promise that it would provide affordable coverage for the uninsured, so why are so many of the uninsured staying away? One reason is cost. True, subsidies offset premiums for some people, but not for everyone. Americans in their 20s and 30s who make more than about $29,000 a year are either not eligible for a subsidy or the subsidy is too small to significantly lower costs.
For example, a 35-year-old Texan making $30,000 a year will qualify for an annual premium subsidy of only $201, leaving more than $2,500 in average out-of-pocket costs for the second cheapest “silver” plan that includes government-mandated benefits like maternity care and substance abuse treatment.
Such requirements and regulations have driven up the cost of exchange premiums in most states – including Texas, where one survey found average premiums on the exchanges were 100 percent more expensive for 27-year-olds than pre-Obamacare rates, and nearly 30 percent more expensive for a family of four.
What’s more, if a family’s income increases at any point during the year, they might have to pay back the subsidy, providing a strong incentive for working Americans not to earn more – or not to sign up.
Obamacare supporters blame poor enrollment in states like Texas on political opposition, arguing that harsh criticism of the law from Gov. Rick Perry and some Texas lawmakers has discouraged people from enrolling.
But most people generally do what they believe is in their best interest, despite what political leaders in Texas say or don’t say. In the case of Obamacare, many Texans have simply decided that the costs of coverage are not worth the benefits.
We’ll know more about who signed up in the weeks to come, but so far it appears that when given a choice between over-priced, government-mandated insurance and paying a fine, many uninsured Texans opted for the latter.
Maybe that’s a good thing, maybe it’s not. But it is a strong indication that Obamacare has not accomplished what it set out to do, and that we are not yet finished with this debate.
Davidson is a senior health care policy analyst at the Texas Public Policy Foundation.