NEW YORK (MainStreet) — There is another potential problem looming on the horizon for President Barack Obama, Secretary of Health and Human Services Kathleen Sebelius, House Minority Leader Nancy Pelosi (D-Calif) and the rest of the Democrats in Congress. Apparently, the Medicaid expansion may siphon off part of the demographic needed to make the Affordable Care Act (ACA) private health insurance, offered via marketplace exchanges, affordable.

The enrollment demographics in the healthcare marketplace exchanges are not quite matching up as needed. A substantial portion of the "young invincibles" - those uninsured in the 18 to 35 age group, who are needed to enroll in private health insurance to keep the community rated premiums from getting out of control - are enrolling in Medicaid instead. If this continues to play out, the private insurance premiums could skyrocket.

Also See: 'Brosurance' Tries to Sell Obamacare: But Will it Work?

Now some say this was the plan all along. Some conspiratorial types on the right of the political continuum say this was Obama's ultimate objective from jump street.

This is not feasible, at least not now, because more than eight out of ten people are still covered through their employer. But who knows what will happen to that employer based insurance market in the future? After all, the ACA may negatively impact those dynamics.

Whether by design or not, the Affordable Care Act is shaping up to be merely a rearranging of the deck chairs on the Titanic. Some of the uninsured will benefit, but some of those who are insured will have to pay more - and contrary to the pro-ACA spin machine - not necessarily for better coverage.

According to the Department of Health and Human Services, the total number of individuals who have completed applications through the ACA healthcare marketplace exchanges for the period October 1 to November 30 is 3,692,599.

  • 1,467,355 of these applications were done through the state exchanges. 2,225,244 of these were completed through the federal exchange - the infamous
  • The marketplaces have processed eligibility determinations and assessments for 3,110,360 of these.
  • 2,307,283 persons are eligible to enroll in a marketplace plan - including 944,531 who are eligible to enroll in a marketplace plan with financial assistance.
  • 364,682 of the 2,307,283 eligible to enroll in a marketplace plan have already selected a plan. This number includes all those who have paid their first month premium and those who have not yet done so.
  • 1,942,601 of the 2,307,283 eligible to enroll in a marketplace plan have not yet selected a plan through the marketplace.
  • 803,077 persons - or a full 26% - of the total number of persons with processed eligibility determinations / assessments) are eligible for Medicaid or CHIP.

This may have ominous consequences on the premiums. The Congressional Budget Office (CBO), in an analysis posted to its website in May, projected that "fewer people will be enrolled in health insurance exchanges than estimated previously—for example, 24 million in 2023 rather than 25 million. That reduction in projected enrollment is the net effect of several factors, the largest of which is the estimated increase in the share of the potentially eligible population that will reside in states that fully extend Medicaid coverage."

The CBO continues by saying that "because of the lower projected enrollment in the exchanges and some small modeling changes, the costs for exchange subsidies and related spending are now expected to be $137 billion lower over the 2014–2023 period than previously estimated."

So while the government pays less on subsidies it pays more on Medicaid. Is anyone keeping track?

Another study by the Robert Wood Johnson Foundation's Urban Institute determined that over half of those would be eligible for Medicaid would be under 35 years of age.

According to another study, this one by the Center for Healthcare Research and Transformation, a Michigan nonprofit promoting universal healthcare states repurcussions Medicaid could bring: "Medicaid expansion and exchange tax credits could have varied effects across age groups. The population who would be eligible for the Medicaid expansion is, on average, younger than people in the current Medicaid program. In 2011, 41% of the Medicaid expansion target population was between 19 and 24 years old. The average age of the Medicaid expansion population was 32.8 years, compared to 39.2 years for current Medicaid enrollees between ages 19 and 64."

The Lewin Group, a Washington D.C. healthcare consulting firm, recently examined health reform's impacts on Los Angeles County. Among many findings, Lewin was able to predict that the highest percent increase of Medicaid newly eligible adults in that county was in the 19 to 24 age group (37%).

"The circumstances of an expanded Medicaid program are going to force states to examine models of care delivery, program effectiveness, and data resource utilization," the Lewin research report said. "Medicaid expansion for working adults will crowd-out private insurance at a high rate and that premium taxes will make private coverage less attractive and public coverage more attractive to lower-income workers."

This, of course, means the youngest who are usually the lowest paid.

Gunnar Biorkn, a Swedish physician and professor of medicine, delivered a speech in 1976 at the University of Chicago regarding "How To Be A Clinician In A Socialist Country."

"It is obvious that the existence of a competing free market constitutes a continuous threat to the operation of a socialist public service, however heavily subsidized by taxpayers' money." Professor Biorkn warned. "The element of quality that derives from patients' personal preference for and confidence in certain doctors cannot easily be done away with so long as people are willing to pay for a free choice of physicians. To do away with such opportunities, therefore, has become a new goal of Swedish healthcare politicians."

Those same dangers may apply in Obamacare with regard to Medicaid's expansion.

--Written by Michael P. Tremoglie for MainStreet