The Winners and Losers of Obamacare: Only 11% of People Who Signed Up For Obamacare Were Previously Uninsured

January 18th, 2014

On October 29, shortly after the launch of, I wrote an editorial titled “The forgotten man of Obamacare,” trying to draw attention to the winners and losers of Obamacare. I conceded that some people would be better off because of Obamacare (mostly the poor and the sick), but questioned what the impact of that improvement would be on everyone else. Since then, the study of the winners and losers has continued.

For example, see this graph compiled by Justice Wolfers based on Obamacare guru Jon Gruber’s research about the winners and losers of Obamacare.

It shows that 80% of people would be “unaffected” by Obamacare. There would be 14% who are “clear winners,” 3% with “no real consequences,” and *only* 3% “potential losers.” Is it worth it to make the lives of 14% of America better if only 3% are worse off, with 80% unaffected?

Gruber said, “The number of winners will vastly outweigh the number of losers but no one knows that yet because of this Web site,” says Gruber.”

Jonathan Crohn agreed the tradeoff was worth it.

But there’s no denying that some people will pay more, whether because rates go up or they have to buy more expensive plans. . . Is the tradeoff worth it? That’s obviously a matter of opinion. And a true accounting would include all of the law’s costs (like higher taxes on the wealthy, lower Medicare spending on various medical providers, etc.) as well as all the benefits (new incentives for quality care, more prescription drug coverage for seniors, etc.).  But the old system had its costs, too—costs that even people paying low premiums sometimes faced.

As did Ezra Klein, citing the trilemma of comprehensiveness, affordability, and accessibility.

So the bottom line is that Obamacare makes insurance more accessible and more comprehensive, which raises average premiums, but it adds subsidies and competitive markets, which lower premiums. Whether premiums are higher or lower for an individual person depends on their precise situation. But premiums are, in general, lower than was expected when Obamacare passed.

Ditto Paul Krugman.

So have these predictions held true? Does the number of winners dwarf the number of losers? We have one new metric to consider this question–how many of the people who have  signed up on the exchanges were previously uninsured. In other words, are the people who are now buying more “affordable” health care those that did not have it before (perhaps due to high cost or lack of availability)? Asides from the Medicaid expansion, how many people can now afford to buy health insurance that could not do so before?

Professor Seth Chandler blogs about what he calls a “stunning” report from McKinsey–“only 11% of those purchasing health insurance in the individual health insurance market were previously uninsured.”

The figures from McKinsey, coupled with the other survey data, are crucial to any evaluation of the success of the Affordable Care Act.  Its proponents like to brag that 10 million people have gained insurance as a result of the ACA.  As has already been pointed out by many, (see here and here) that figure is a grotesque exaggeration. But hitherto it had been assumed that at least a substantial portion of the individual Exchange purchasers were coming from the ranks of the uninsured. If the McKinsey report, which was based on a survey of over 4000 purchasers, holds up, it further reduces the number of people who have been helped in the most significant way by the ACA. …

And ACA proponents have been quick to point to the 2.1 million (at last count) of enrollees in the individual Exchanges as amongst those winners.  If, however, 70-90% of those enrollees aren’t genuine winners but merely people cutting their losses, that is a very disturbing fact that must be given considerable attention in future debates over this landmark program.

Seth makes an important point about the winners and losers–or as I like to call them, the forgotten men [and women]–of Obamacare. The implementation of the ACA impacted hundreds of millions of Americans in ways we can only barely begin to calculate–from coverage to job hours to layoffs to who-knows-what. If the net result of ACA is a small number of people added to the insurance rolls, then the question of the tradeoff becomes much, much clearer.

It is not enough that a few people have indeed been helped by the ACA. Billions of dollars of overhead have been spent on getting the individual Exchanges up and running.  Millions of people have been made to worry that their insurance coverage — imperfect as it may be — will be lost. Most likely, millions of individuals have already lost health insurance coverage as a result of the ACA. And, as I have discussed, millions of people dependent on small business as the source of their health insurance are likely to be further alarmed as those policies start to renew later this year. Many of them may lose advantageous coverage too.  There are many ways to improve people’s health with billions of dollars.   If the upside of Title I of the ACA — the part containing the elaborate individual Exchange mechanism is mostly a substitution of expensive ACA coverage — which, yes, has some additional benefits — for less expensive forms of coverage, then it those provisions are, to that extent, not making the sort of material improvement in people’s health that would constitute the only real justification for the expenditures.

If the President only wanted to help a small percentage of Americans, this could have been done with *much* less impact on the economy, our healthcare market, and the way our labor market operates. But, the President wanted to reform everything. And, as you will recall, it was sold on the promise that nothing would change, and that we could keep our plans. This was all malarkey from the outset. And they knew it. To the President, there were no losers to the ACA. Everyone is a winner!

As time progresses, it will become harder and harder to compare the ex ante predictions with the ex post reactions (Ezra Klein has “it’s like apples and oranges” on macro). We are now living in the age of Obamacare. And that will be the standard on which all things are judged.

Update: More from Avik Roy on how so few people benefiting makes repeal more likely.

I, along with most observers, have viewed as doubtful the likelihood that Obamacare ever gets repealed. Even if Republicans manage to regain the White House and the Senate by 2017, there will be tens of millions of people on Obamacare-based coverage by then. Prior to the website fiasco of October, the Congressional Budget Office projected that 34 million Americans would be enrolled in either the exchanges or the Medicaid expansion in 2017. It would be politically impossible to disrupt the coverage of 34 million people.

But what if the number is far less than 34 million? What if it’s only 5 million? Such an epic fail would seem far-fetched, but then again, so did the dismal performance of Obamacare to date. For 2014, the CBO has projected that 14 million previously uninsured Americans would gain coverage under the law. With about ten weeks left in this year’s enrollment period, we’re looking at a coverage expansion of less than a million.

Remember also that as many as 100 million previously insured Americans will endure higher premiums—and higher taxes—under Obamacare. The political constituency of the newly insured could be dwarfed by the political constituency of those harmed by the law. If that turns out to be the case, President Obama’s signature legislation may not be long for this world.