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Obamacare's self-inflicted wound

By Newt Gingrich
updated 1:35 PM EST, Thu November 21, 2013
A health care specialist helps people select insurance at a free Affordable Care Act Enrollment Fair in Pasadena, California.
A health care specialist helps people select insurance at a free Affordable Care Act Enrollment Fair in Pasadena, California.
STORY HIGHLIGHTS
  • Newt Gingrich: Medicaid and Obamacare exchanges compete for the young
  • Gingrich: U.S. health care is too vast and complex for one-size-fits-all program
  • He says the young must sign up to offset the cost of older, sicker enrollees
  • Gingrich: Technology, entrepreneurial spirit could deliver better health care

Editor's note: Newt Gingrich is a co-host of CNN's "Crossfire," which airs at 6:30 p.m. ET weekdays, and author of a new book, "Breakout: Pioneers of the Future, Prison Guards of the Past, and the Epic Battle That Will Decide America's Fate." A former speaker of the House, he was a candidate in the 2012 Republican presidential primaries.

(CNN) -- Obamacare is dying.

The latest wound is largely self-inflicted. Medicaid and the new Obamacare exchanges are competing for the same young and healthy customers that Obamacare needs to survive -- and Medicaid's winning. President Obama and the entire Democratic Party have nobody else but themselves to blame.

In its hubris, the Democratic Party members assured the country again and again in 2009 and 2010 that it knew enough to be able to forcibly reorganize one-sixth of the American economy without causing millions to lose their current health insurance coverage, without triggering skyrocketing costs and without causing a host of terrible unintended consequences.

Newt Gingrich
Newt Gingrich

The problem is that it is impossible. The information that would be required to competently manage America's health care economy is too vast, complex and dispersed throughout the economy and among millions of people. It is impossible for anyone to know or control. And repeated assurances by Obama and virtually every Democrat that it was possible are the greatest lie perpetrated by the supporters of Obamacare.

Consider the latest illustration of this destructive hubris of the Democratic Party. To make Obamacare work, the White House needs to attract 2.7 million Americans under the age of 35, out of 7 million uninsured, into the new Affordable Care Act health insurance exchanges next year -- the young invincibles most averse to buying insurance in the first place.

If the young don't sign up in big numbers, the cost of insurance premiums and government subsidies balloons to pay the expense of taking care of older, sicker enrollees. An actuarial death spiral begins, with increasing costs leading to fewer and fewer young people signing up and making the problem worse and worse until the insurance companies can no longer afford to manage the program and exit the market.

'How we got Obamacare to work'
Obamacare's youth problem

But what the architects of Obamacare apparently failed to take into account is that many young people are also eligible for Medicaid and will enroll in that government program instead, in the 25 states that have agreed to expand Medicaid.

According to a study by the Kaiser Family Foundation, more than half of the total uninsured population qualified for Medicaid since they earn less than 138% of the federal poverty level in the states that have expanded Medicaid. Since income grows with education and experience, the younger these uninsured are, the more likely they are to qualify for Medicaid because they are also poorer. And since Medicaid is free for these young people, that means no premiums are going to the insurance companies to subsidize the older enrollees.

The other challenge in signing up young people is that the Obamacare law also made it possible for young people to stay on their parents' plan until the age of 26, further reducing the pool of the eligible young who can subsidize the old and sick. Only 21% of the uninsured population are in the target age bracket of 26 to 34.

This has set up an enrollment battle between Medicaid and the new insurance exchanges for this same pool of customers.

Early evidence from Connecticut, Maryland, Washington and Kentucky suggests that the young who do sign up are enrolling overwhelmingly in Medicaid. According to an article in the Connecticut Mirror, figures released in October showed that most of the young enrollees were signing up for Medicaid.

Data from Kentucky tell the story; 47,966 residents enrolled via the exchanges, but only 8,780 signed up for insurance. The remaining 82% went to Medicaid. Worse still, only 19% of the Kentuckians who bought insurance were between 18 and 34 years of age. In the Bluegrass State, eight times as many of the young cohort enrolled in Medicaid as insurance plans.

If these trends hold up, Obamacare's exchanges will implode financially.

Instead, we need a "breakout." Technology and the entrepreneurial spirit of Americans have the capability to deliver better health care at lower cost for all Americans. We need to replace Obamacare with reforms designed to allow us to live longer, happier and healthier lives far into the future. It all starts with an honest recognition that a one-size-fits-all model of health care cannot work in a country as large and diverse as ours. We need reforms tailored for individuals who can choose what is best for them.

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The opinions expressed in this commentary are solely those of Newt Gingrich.

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