Is Obamacare failing?

Three years ago, health economists believed Obamacare’s soon-to-launch marketplaces would grow to replace much of America’s fractured, complex employer-based health insurance system.

Predictions for the employer-sponsored insurance system’s collapse ran rampant. The question around companies shifting workers to the new public marketplaces was often framed not as if but when. University of Pennsylvania’s Zeke Emanuel pegged it at 2025. MIT’s Jonathan Gruber estimated 2050.

These days, you don’t hear those predictions anymore.

It was easy, five years ago, to explain why big companies would dump their workers onto the public marketplaces.

Insurance costs kept rising. The average employer-sponsored plan for a family of four cost $17,545 last year. Why would companies keep paying for coverage when they could pay a relatively small penalty ($2,000) to shift workers to the public marketplace? Congressional Republicans estimated in 2012 that American companies could save a collective $422 billion moving their workers to the marketplaces.

But we have scant evidence of that storyline becoming reality. Employer-sponsored coverage has held pretty steady. And while there are individual stories about certain companies ending health insurance coverage, most studies fail to show any larger trend in the economy. There are just as many people getting coverage at work as when Obamacare took effect.

It's true that Obamacare’s marketplaces are in a period of tumult. It's also true that the uninsured rate in the United States has fallen to the lowest point in decades. That change is, without a doubt, the result of the Affordable Care Act’s insurance expansion.

The uninsured rate has consistently declined since the health law’s insurance expansion launched in 2014. The most recent Gallup data shows that 11 percent of Americans currently lack health insurance — the lowest rate the group has ever recorded.

In some places, the marketplace looks like this. California, for example, has had no trouble attracting a robust set of insurance plans that want to sell on its marketplaces. Shoppers in large Texas cities like Dallas and San Antonio will be able to select from a half-dozen plans in 2017.

Insurance markets are very local. Health plans gravitate toward higher-population areas where they can more easily enroll lots of customers and have a wide array of hospitals and doctors to contract with.

There are areas of the country that had competitive individual markets prior to Obamacare, largely places that are urban with affluent populations. Those places tend to continue to see multiple plans offer coverage. But in the areas that have long struggled to attract competition — places with smaller, low-income populations — the situation has not hugely improved.

The problem is getting worse. There are currently five states — Alaska, Alabama, North Carolina, Oklahoma, and Wyoming — that only have one insurance plan signed up to sell in 2017. This year, Wyoming was the only state in that situation.

And there is currently one county in Arizona that has no health plans signed up to sell.

Obamacare’s future might not look like the brand new, competitive market that health plans envisioned. Instead, it might look a lot like a program we’ve known for decades: Medicaid.

The population that has flocked to the marketplaces looks pretty similar to the Medicaid population. The vast majority of Obamacare’s enrollees are low-income: 81 percent earn less than 250 percent of the poverty line ($29,000 for an individual or about $60,000 for a family of four).

These are the types of people who likely couldn’t afford to buy coverage on the individual market before Obamacare began providing financial help. "Prior to the ACA, the individual market — because the products were expensive and there was no subsidy — was built for a population that resembled the white-collar employer market," Adelberg, the former administration official, says.

But now these people are getting heavily subsidized coverage. And the plans they’ve liked are generally those that are affordable, where their federal subsidies can stretch the furthest.

The insurers that have succeeded on the marketplace are those that have a background running Medicaid programs for states. This includes companies like Centene. It came into Obamacare knowing how to target those people, as St. Louis Post-Dispatch reporter Samantha Liss detailed in a recent piece: