New data published in early 2025 by the Centers for Medicare & Medicaid Services (CMS) on nearly 24 million people insured in the Marketplaces at the beginning of this year may have sparked considerable enthusiasm among supporters of expanding government influence in healthcare. After all, this figure represents a new record with over 3 million new insured individuals. So everyone should have reason to be happy, right?

However, a closer look at the data casts doubt on this new milestone introduced by Obamacare. In this case, this is because many people equate the mere fact of having insurance with easy access to medical services. Nothing could be further from the truth, especially when government interventionism heavily regulates the private health insurance market.

The Interventionism of Obamacare

The main changes consisted in the creation of special and strictly-regulated Marketplaces through which the uninsured can purchase health insurance plans at affordable (i.e., heavily-subsidized) prices. In order to overcome market failure, these “markets” have been subject to numerous regulations. The most important of these, as described by McGuff and Murphy, are:

• Mechanism to provide health insurance to (most) Americans (“universal coverage”)
• No price discrimination with respect to insurance premiums (“community rating”)
• Predetermined minimum coverage (“essential health benefits”)
• Obligation to have health insurance (“individual mandate”)
• Government subsidies for the poor
• Government guarantees for insurance companies

The Obamacare regulations were, therefore, another turn of the (regulatory) screw. In my 2023 book, The Economics of ObamaCare, I analyzed in detail the effects of these changes, particularly on Obamacare’s flagship “product”—the Marketplaces. Here are the results:

• Average increase in premiums by 69 percent between 2014 and 2020 (benchmark: second-lowest-cost silver premium for a 40-year-old). In comparison, the CPI for medical care rose by just under 19 percent, and the CPI by 10 percent over the same period.
• Subsidizing 72-85 percent of premiums in the form of Advanced Premium Tax Credit (APTC) between 2015 and 2020.
• A significant increase in additional payments incurred by insured persons, in particular deductibles, which rose by 37 percent (from USD $3,049 in 2016 to USD $4,181 in 2020) for the most popular silver plans.
• Decline in the number of insured. The highest number—12.7 million people—were insured in 2016. This number fell to 11.4 million in 2020. The plans were much more ambitious, as estimates for 2012-2015 assumed 20-25 million insured persons. At best, only half of this number was achieved.
• The share of optimal silver plans (in the total number of plans) decreased from 65 percent (2014) to 59 percent in 2020. The share of more “prestigious” gold and platinum plans also fell from 9 percent and 5 percent to 7 percent and 0 percent. In contrast, the share of cheaper and inferior bronze plans increased from 20 percent to 33 percent.
• The ineffectiveness of programs supporting insurers, especially the reinsurance and risk corridors programs. For example, in the case of risk corridors, $362 million was collected in 2014 with claims of $2.87 billion.
• Financial losses and the exits of major insurers from Marketplaces. In April 2016, the largest health insurer in the US, UnitedHealth Group, announced that by the end of 2017 it would exit most of the state’s Marketplaces in which it insures nearly 800,000 people. The insurer estimated its losses for 2016 alone at about $650 million. A few months later, another major insurer—Aetna—also announced its planned exit from 11 out of 15 states where it has been present so far.
• As a result, in 2020, only 29 percent of insured persons could choose health plans from among 3 or more insurers. In 2016, this percentage was 64 percent.
• An increase in the share of plans with a limited network of providers (HMO, EPO) at the expense of plans with a wider network of providers (POS, PPO). This is a result of cost cutting.

Death Spiral

All these negative effects result—to a greater or lesser extent—from a phenomenon commonly referred to as the death spiral. This phenomenon is characteristic of the health insurance market. In short, Obamacare regulations forced insurers to accept people with higher health risks and combine them into uniform groups with people with lower risks. As a result, this led to greater demand for medical services among the former group. In order to maintain the financial stability of their plans, insurers could only respond by increasing premiums and then deductibles. However, this led to the departure of some of the lower-risk insured, which, in turn, caused a decline in premium income. The spiral of premium increases began to accelerate. Maintaining this state of affairs required the injection of billions more dollars from taxpayers’ pockets, otherwise the entire system would collapse. This is exactly what happened and, as a result, we have seen further balloon-pumping in recent years.

Continuation of the Negative Trend

A record 24 million insured persons is not a success or proof of the efficient functioning of the regulated insurance market. The government has no other arguments, so it informs the public about new insured persons. However, it forgets to add that formal insurance does not mean easy and cheap access to medical services. This can be seen in the example of Canada. Americans insured through Marketplaces are also experiencing this in their own way. Below are some important statistics showing the continuation of the trend from 2014-2020:

• According to data from the Kaiser Family Foundation (KFF), the average benchmark premium in 2025 reached a record high of $497. A renewed trend in premium increases can be observed from 2023 onwards. The previous peak was reached in 2018, when the average premium was $481.
• Worse still, the growth in premiums would have been even more pronounced had it not been for increases in deductibles, copayments, and coinsurance. Of particular importance is the deductible, i.e., the amount that the insured must pay out of their own pocket before insurance coverage kicks in. For the most popular silver plans (among healthcare.gov plans), the deductible in 2024 was $4,527 (plans with Cost Sharing Reduction – Silver CSR73) and $5,241 (Silver plans without CSR) (Figure 1). For bronze plans, the average deductible was as high as $7,258. This means that many Marketplace policyholders must first pay an average of at least $4,500 out of their own pocket.

Source: KFF

• A continuing decline in the share of optimal silver plans in the total number of Marketplace plans can be observed (71 percent in 2017 compared to 54 percent in 2024) and an increase in the share of more limited bronze plans (23 percent in 2017 compared to 31 percent in 2024). Although the share of broader gold plans also increased over the same period (13 percent in 2024 compared to 4 percent in 2017), it cannot be denied that some of the insured, as a result of higher premiums and deductibles, changed to a worse plan or opted out of insurance altogether.

One might ask why, despite increases in premiums and deductibles, these health plans continue to attract new subscribers. There are several reasons for this.

First, thanks to APTC, those who are eligible for it do not pay most of the premium. This makes a difference when, for example, instead of paying $600, you only pay $100. Regardless of the reasons for such high premiums, this situation creates a false sense of affordability.

Second, it may seem shocking, but many insured people are simply unaware of the prohibitive deductibles—they only see part of their health insurance premium. And, in the case of deductibles, we are not talking about $500 or $1,000, but several thousand dollars. This completely distorts the idea of insurance. However, as long as you don’t need a doctor, you can continue to live in ignorance.

Third, the growing number of insured persons is the result of—among other things—lowering the eligibility requirements for receiving APTC. On the government website healthcare.gov, we can read that: “If your income is above 400% FPL, you may now qualify for the premium tax credit that lowers your monthly premium for a Marketplace health plan.” It is therefore clear that such solutions are more about buying political support than a desire to help the poorest. It is also worth noting the expansion of Medicaid eligibility in many states. As a result, in 2024, 1 in 6 non-elderly Americans gained access to healthcare thanks to Obamacare.

Conclusion

The increase in the number of people insured on Marketplaces is not proof of effective healthcare—it is simply a statistic. A more detailed analysis reveals problems with cost control, rising premiums and deductibles, and deteriorating quality in the form of fewer insurers and plans with limited provider networks. As usual, attempts to improve markets have the opposite effect to that intended, and this should be borne in mind in future attempts to “reform” healthcare.