Not a Very Happy Birthday for Obamacare

Today, March 23, marks the one-year anniversary of the passage of President Obama’s landmark health care law.  In pressing his case for the overhaul, the President made several lofty promises—and assured Americans it would expand access to health care while improving quality and reducing costs.  The President vowed the law’s reforms would “take effect right away.”

So, after one year, is the President on track to deliver?  Not in the slightest.

Throughout the past year, ObamaCare’s efforts to expand coverage have fallen flat—even as it has raised the cost of care for individuals and businesses alike.

Take the law’s vaunted effort to extend coverage to people with preexisting conditions through a new federal high-risk pool.

The Obama administration estimated last year that 375,000 people who had been previously shut out of the insurance market would turn to the new federal program for coverage.  But enrollment has severely lagged expectations.  Despite a comprehensive public-awareness campaign, only about 12,000 people have actually signed up.

That’s less than 5% of the administration’s initial projection.

ObamaCare’s attempt to control the price of health insurance has also been an abject failure.  The law foisted minimum medical loss ratios (MLRs) on insurance companies, mandating that they spend 80% of premium dollars from the individual and small-group markets—and 85% of premiums from the large-group market—on medical claims.

Officials hoped that the MLRs would force insurers to pare back their administrative costs and profits—and devote more of consumers’ money to paying for care.  Instead, they’ve undermined competition in insurance markets across the country, leaving consumers to deal with fewer choices and higher prices.

For instance, the Principal Financial Group, an Iowa-based insurer, has quit the health insurance business entirely thanks to the new rules.  And Aetna has left Colorado’s individual insurance market.

Several states, including Maine, Nevada, Kentucky, and New Hampshire, have asked the Obama administration to exempt them from the MLR requirements.  Last week, the government granted Maine a three-year waiver.  At least 10 other states have expressed interest in filing for a similar exemption.

Maine’s case is instructive.  Only three insurers operate in the state’s individual insurance market.  One of them warned that it would cease writing policies if the new MLR rules went into effect.

ObamaCare’s rules are also threatening many Americans’ current health insurance plans.  The new law would invalidate low-cost, no-frills “mini-med” plans, which offer a minimal level of health coverage to beneficiaries, for not providing $750,000 in annual benefits.  By 2014, no plan will be permitted to have a maximum benefit cap.

Firms with many low-wage, seasonal, or part-time workers often rely on mini-meds to furnish at least a modicum of health care to their workers.  Without the plans, the workers would be uninsured.

As McDonald’s, one of the affected companies, explained, “It would be economically prohibitive for our carrier to continue offering [mini-med plans]” if it were required to adhere to the new MLRs.

The Obama administration wasn’t too wild about its signature achievement depriving millions of Americans of insurance coverage, so it has distributed more than 1,000 one-year waivers to corporations such as McDonald’s, local labor unions, and even municipal governments.  In theory, organizations would have to reapply for a waiver every year through 2014, when the health-insurance exchanges go into effect.

If ObamaCare’s consumer protections were so crucial, then why has the administration been so quick to hand out waivers?

In the past year, ObamaCare has also suffered at the courthouse.  State attorneys general in more than half the country have challenged the constitutionality of the law—particularly its centerpiece, the individual mandate, which would require all individuals to obtain health insurance or pay a fine.

Two federal judges agreed with the states.  Judge Henry Hudson in Virginia ruled the individual mandate unconstitutional, while Judge Roger Vinson in Florida deemed the entire law unconstitutional.  Implementation of the law will continue, pending the Obama administration’s appeal to the 11th Circuit.

And in state legislatures and governors’ mansions around the country, lawmakers are refusing to implement many of ObamaCare’s key provisions, including the government-run health-insurance exchanges.  The governors of Florida and Alaska have turned down money from the federal government earmarked for instituting ObamaCare in their states.

Last March, President Obama promised to provide less expensive, higher-quality insurance coverage to all Americans.  One year in, his experiment in health reform seems doomed to fail.