Opinion Columns & Blogs

Medical surprise: Many enrollees didn’t even need Obamacare

The Healthcare.gov website is shown on Tuesday, Oct. 25, 2016. Signups for health care have accelerated since Donald Trump was elected president.
The Healthcare.gov website is shown on Tuesday, Oct. 25, 2016. Signups for health care have accelerated since Donald Trump was elected president. TNS

With Trump’s election, there are suddenly lots of questions about the fate of President Barack Obama’s health care act: Will it be repealed, in part or in whole? And if so, replaced with what?

One place to look for answers is in a new article about Obamacare’s coverage expansion. Learning more about what has already happened with Obamacare turns out to provide some clues about what may happen to it in the future.

That’s because Molly Frean, Jonathan Gruber and Benjamin D. Sommers provide a detailed look in the Oct. 27 issue of the New England Journal of Medicine, not just at the amount of coverage expansion but also the sources of it.

According to the authors’ analysis, they can explain about 70 percent of the decline in the number of uninsured people through three factors: the subsidies for buying insurance; the law’s more generous criteria for Medicaid eligibility; and the “woodwork effect,” in which people who were previously eligible for Medicaid “came out of the woodwork” and signed up for the program in 2014.

But here’s the surprising thing: Of the change that they can explain, they find that the largest effect comes, not from the subsidies, nor from the mandate, nor even from the Medicaid expansion. The largest effect was due to that woodwork effect – about 44 percent of the effect they can explain, or roughly 30 percent of the overall reduction in the number of uninsured in 2014.

Call it 3.3 million people, out of the 11.6 million who gained insurance that year.

We’ve always known that there was some “woodwork effect,” in which people who were already eligible signed up because of some combination of easier signup procedures and the heightened publicity that surrounded Obamacare’s passage and implementation.

But these are huge numbers; the woodwork effect is more than twice as large as the number of people who became eligible for Medicaid thanks to Obamacare’s more generous criteria.

This suggests the possibility that the plurality of people who gained insurance thanks to the law technically didn’t need a new program to become insured; all they needed to do was to sign up for public insurance they already qualified for.

That has implications for the law’s current operation. Brian Blase of the Mercatus Center points out that this means the federal government is probably overpaying states that expanded their Medicaid programs, because Obamacare offered those states more generous subsidies for new enrollees, but those extra subsidies were supposed to cover only the newly eligible.

This 44 percent figure also has implications for repeal. If that many of the people who gained coverage under the law already qualified for Medicaid under the old criteria, those people will probably stay on Medicaid even if the entire law is junked. That means that repeal will not save as much money as Obamacare’s detractors might hope – but it also means that Obamacare’s supporters have less to fear, because fewer people would lose coverage.

That, in turn, means that repeal probably gets politically easier to pass. It’s hard to say exactly how much easier, of course; Obamacare’s architects discovered, to their great frustration, that it was very hard to communicate much more than a handful of crude talking points to the public at large – and that their opponents had their own crude talking points, many of them quite effective.

Anyone trying to dismantle Obamacare will have the same problem in reverse; you can reassure all those previously eligible Medicaid patients that they won’t lose their insurance even if Obamacare is repealed, but that doesn’t mean they’ll hear you or believe you. Especially after your opponents get done waving their own studies, which suggest much bigger coverage losses.

So while this study may provide some clues as to the future of Obamacare, it hardly provides a road map. One thing is certain, however: We’ll be hearing a lot more about it in the months to come.

Megan McArdle is a Bloomberg View columnist writing on economics, business and public policy.

  Comments