New data: Obamacare primarily a Medicaid expansion

With the next Obamacare enrollment period approaching on Nov. 15, new numbers from Obamacare’s first go-round are finally shedding some light on who bought what earlier this year.

According to a Heritage Foundation analysis, seven out of 10 newly insured under Obamacare are actually on Medicaid.

“When it comes to covering the uninsured, Obamacare so far is mainly a simple expansion of Medicaid,” Heritage Foundation analyst Edmund Haislmaier wrote.

Prior data has mainly been limited to surveys and vague Obama administration numbers. The new data, analyzed by market strategists Mark Farrah Associates and the Heritage Foundation, includes data from government rolls and private insurers for the second quarter of 2014.

These numbers matter because the reporting for January through March didn’t capture people who signed up at the last minute after President Barack Obama extended the deadline into April. The second quarter numbers provide a complete picture of Obamacare for the enrollment period that began Oct. 1, 2013, with the infamous Healthcare.gov crash.

The new data show that both on and off exchanges like Healthcare.gov, private insurance companies gained about 6.3 million people. Private insurance through employers, though, decreased by about 3.8 million. That means just 2.5 million people who didn’t have private insurance last year have it now.

The other aspect of Obamacare is, of course, a Medicaid expansion. Since the beginning of the year, more than 6 million people enrolled in Medicaid. Counting private insurers and Medicaid together, 8.5 million people have insurance now that didn’t last year.

For the most part, enrollment numbers matched congressional estimates for Obamacare’s first year. But the sharp loss in employer-based coverage was unexpected. That means about 71 percent of the newly insured are on Medicaid—government welfare rather than subsidized private plans.

The U.S. Department of Health and Human Services said in September at least 7.3 million people gained insurance on the exchanges. Why that number is higher than the net 6.3 million that enrollment data show—on and off the exchanges—is unclear. It’s not an apples to apples comparison, and the Heritage study can’t give specifics about how exactly the market shuffled around, Haislmaier told me. Essentially, the water level in the insurance bucket rose, but it’s not easy to tell if and where there might be leaks.

But the net result of Obamacare’s first enrollment period is clear. Losses in the private market wiped out nearly two-thirds of the gains there, as employers shed costs. That means the exchanges have done a poor job of reaching the previously uninsured. “The rest of it was just people substituting new coverage for old coverage, basically,” Haislmaier said.

What happens next year may be a completely different story. Federal estimates disagree about whether the Medicaid expansion will continue to grow, compared to past expansions, Haislmaier told me.

And a new round of people are losing their non-compliant health plans. The Congressional Budget Office also expects a sharp loss in employer coverage in the next few years as the president’s exceptions to the law’s employer mandate expire. Many companies are dropping coverage for employees the law doesn’t require them to cover to compensate for increased costs. The mandate kicks in for companies with more than 100 employees in 2015.