Consumers are Dropping Obamacare Due to the Poor Value

In 2022 I took advantage of the enhanced health insurance subsidies and enrolled in an Obamacare health plan. It was so worthless that the State of Texas invited the insurer not to return to the Texas market the following year. My premiums were around $199 a month, with a subsidy of around $400 (I forgot the exact amount). I never filed a claim, nor could I find a doctor affiliated with my health plan. In 2023 I switched to a Cigna plan that was better, but more expensive. In 2024 I decided to enroll in a health plan administered by my old hospital employer. Nearly all the doctors in the plan appeared to work for hospital-owned clinics. My premiums were around $230 and a subsidy of more than $450. I literally dropped coverage after three or four months. I became concerned that many of their providers worked for hospital-owned facilities and would steer care to expensive hospital services. My deductible in 2022 was $8,700, $9,100 in 2023 and $9,450 for 2024. Those deductibles are so high my plans were not even HSA compliant. 

I have received medical care, blood work and diagnostic testing over the last several years, but I literally did not file a single claim against any of these policies. In 2022, my coverage allowed Friday Health Plan to earn revenue of about $7,200, Cigna cleared nearly $8,000 off me while Baylor got between $2000 plus for three months. In a nutshell, I spent nearly $6,000 and the government spent nearly $12,000 on coverage I never used. Oh, I forgot to mention a change in our retirement planning caused me not to qualify for the enhanced subsidy for 2023 and 2024. The government clawed back around $6,500 when I filed my tax returns. In other words, I spent about $12,500 on health coverage, while the government spent around $5,500 on my behalf. In any of those three years I would have needed to spend an average of just over $9,000 before I would have gotten any benefit out of my coverage. In 2022 my deal was not horrible, spending about $2,400 while facing an $8,700 deductible to insure against catastrophic illness. The following year (2023) I would have experienced an illness costing more than $17,000 before I benefited from my health plan. The third year, the deal was so bad I dropped coverage. I am not alone.

The Wall Street Journal reports Centene, a purveyor of Medicaid and Obamacare plans, is facing an earnings crunch as healthy Americans are dropping coverage because it is such a bad value.

The end of certain pandemic-era health-insurance benefits over the past year is prompting more Americans to drop out of coverage plans, which Centene said could hollow out its earnings. On top of that, the proposed Medicaid cuts in President Trump’s budget bill would limit the number of people enrolled in Centene’s largest business, Jefferies’s David Windley said.

“Centene didn’t anticipate the extent of this,” Windley said. “The people left in the market are fewer and sicker, and that’s killing the margins.”

According to the Kaiser Family Foundation  (KFF), the number of people paying their own way, enrolling in Obamacare without subsidies has fluctuated from 1.7 million to a high of 2.3 million since 2015. The current number is 1.7 million. By contrast the number of Americans with a premium tax credit about doubled from 10 million (2015) to nearly 20 million in 2024. The Congressional Budget Office predicts millions will drop out without generous subsidies:

“Without a permanent extension, CBO estimates, the number of uninsured people will rise by 2.2 million in 2026, by 3.7 million in 2027, and by 3.8 million, on average, in each year over the 2026-2034 period,” the report states.

The CBO’s estimates seem rather low. If nearly 10 million additional people enrolled in coverage between 2021 and 2024, millions of those are going to drop coverage about as quickly as they enrolled. It will be the healthy ones, because Obamacare is such a bad deal for them (by design).

It is too bad the Trump Administration did not use the One Big Beautiful Bill as an opportunity to tweak Obamacare to allow for affordable health plans. Allowing people to be charged for their health risk in return for foregoing unlimited benefits would make coverage something more consumers could afford without subsidies. Indeed, it would make coverage a value more comparable with the cost.