Obamacare's Underwhelming Success in California


credit—Scott Smith (SRisonS) / Foter.com / CC BY-NC-ND

Supporters of Obamacare have pointed to California as one of the law's biggest success stories. After some initial glitches, the health exchange has, by most accounts, been mostly functional. The state's exchange accounted for the lion's share of private health insurance sign-ups nationally during the early months of open enrollment. And reports suggest that, even in 2014, is has continued to add new sign ups at a solid clip. Earlier this month reported that just over 500,000 people had signed up for policies in the exchange by the end of 2013, and that early reports indicated that about 625,000 had signed up by January 15. That put the state on track to meet its enrollment target of about 500,000 to 700,000 for the year.

But those numbers don't tell the whole story. For one thing, they don't tell you how many people have actually paid for their plans. Insurance industry consultant Robert Laszewski has said that he expects that 10-20 percent of sign-ups will not result in an enrollment because of non-payment.

The headline numbers also don't tell you how many people signing up for coverage in the state's exchange are actually getting coverage for the first time, and how many were previously covered—and are simply moving into the exchanges because their old policies were canceled.

When you factor in cancellations, the picture no longer looks quite so bright. In October, a spokesperson for the state's exchange estimated that about 900,000 individual market plans would be canceled in the state by January 1 of this year as a result of Obamacare—a figure that the state exchange recently confirmed to The Weekly Standard's John McCormack (who wrote about the gap between sign-ups and cancellations last week).

So even if the state hits the top end of its enrollment target, the state will still have had more canceled existing policies than exchange enrollments—in a state that received more than $900 million in federal grants to build and advertise its exchange. In context, California's experience with Obamacare so far looks less like a success story and more like a reminder of how low the bar for success under the law has been set.