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Colorado’s ‘Gruber Model’ health exchange predictions not performing well

Obamacare advocates claimed that people were unable to afford health insurance and that creating the equivalent of government run brokerage firms called health benefits exchanges would help millions of people.

icon_blog_noteIn 2011, Connect for Health Colorado, the Colorado exchange, hired Gruber and Associates to predict the effects of Obamacare in Colorado. As the graphs show, current data do not give much confidence in Gruber and Associates’ 2016 predictions. If current trends continue, they could end up being off by as much as 40 percent.

If more people than expected continue to be enrolled in Medicaid, the extra cost to state and federal taxpayers could be more than a billion dollars a year. The low sign-up rates for private insurance, even with the possible influx of some of the 14,000 people who were dumped on the market by the shut-down of the state’s high risk insurance pool CoverColorado, should lead people to wonder why the costly, poorly functioning, health exchanges couldn’t be replaced by a simple refundable federal tax credit.

Using expenditure data from the State Auditor’s report on exchange spending as of mid-2014, the exchange has spent $1,178 dollars per private sign-up. Before Obamacare, the cost of having private brokers help people sign up was included in the (much lower) premium cost. Though most of the people calling the Colorado exchange ended up being enrolled in Medicaid, the state was already operating a separate Medicaid sign-up system. There is no reason why taxpayers should have been required to pay for an additional system to handle Medicaid enrollment.

 Linda Gorman is health care policy center director at the Independence Institute, a free market think tank in Denver.





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