Two studies published in the most recent Health Affairs journal raise questions about the contention that the Affordable Care Act will reduce employment, wages, and hours worked by employees.
The study by Gooptu and colleagues examined the effects of the law’s Medicaid expansion on employment and found no statistically significant effect through March 2015. A related study by Moriya and colleagues examined the subsidy structure provided to households getting health insurance through the ACA’s exchanges and similarly found no discernible effect on levels of part-time employment for employees eligible for these subsidies.
These studies provide useful new information, but they do not mean, as some reporting on them seems to suggest, that there is nothing to worry about with respect to the ACA’s effects on labor markets. Given the structure of the ACA, it would be hard to conclude the law would not eventually reduce hours worked or total compensation, although the magnitude of the resulting changes may be hard to detect in the U.S.’s large and complex labor markets.
Most standard questions aimed at presidential candidates in recent years have sought affirmation or denial of standard propositions. For example: Do you favor repealing or extending ObamaCare? Would you ensure near-universal insurance coverage? Do we need more federal regulation or greater state-level discretion?
That or they try to generate advance signals about near-term tactics. For example: Should we increase or trim taxpayer subsidies? How much should price variation be limited or curtailed? Are coverage and care goals better achieved through regulatory mandates or market-like incentives?
However, this is getting well-worn and generic, if not a little hackneyed, for these questions tend to obscure more basic dividing lines between candidates, and how candidates are likely to think about health policy and frame any plans for future changes. Of course, our vast accumulation of laws, regulations, institutions, entrenched interests, vulnerabilities, and evidence-free assumptions constrain any sort of “blank sheet of paper” rethinking in this sphere of politics. But we might better predict how candidates will proceed if we ask them the following five questions…
Since October, at least six independent and credible sources have confirmed rate increases on the ObamaCare exchanges will be in the double digits. However, these are gross premium hikes. Net premium hikes paid by enrollees are distorted by tax credits paid to insurers. These badly designed tax credits have a number of perverse consequences. It is widely understood that they impose disincentives to work. What is less well understood is that the tax credits are so badly designed that they impose a ratchet effect causing net premium hikes greater than the gross premium hikes. According to new research published by the National Center for Policy Analysis, this effect is concentrated among ObamaCare enrollees in the lowest income brackets.
Last week, the Congressional Budget Office released its latest Budget and Economic Outlook. In this report, CBO notes that the deficit in 2016 is expected to be $544 billion and federal outlays will rise by 6 percent, to $3.9 trillion, compared with 2015. Mandatory spending—such as that for entitlement programs like Social Security, Medicare, and Medicaid—will rise $168 billion this year. Federal spending on major health care programs will account for the largest portion of this rise as federal outlays for Medicare, Medicaid, exchange subsidies, and the Children’s Health Insurance Program (CHIP) will increase $104 billion (11 percent) in 2016.
A reason that might explain why fast-food employees aren’t getting more hours: ObamaCare.
Starting Jan. 1, businesses with 50 or more full-time employees must offer health insurance to all full-time staff or pay a hefty fine. Employers with 100 or more workers had to start offering coverage last year. But smaller businesses that operate on lower margins, especially restaurants, complained loudly about the cost.
And some fast-food franchise owners figured out a way to avoid paying for coverage: Just make as many workers as possible part time. A U.S. Chamber of Commerce survey found nearly 60% of small franchise businesses said they would make personnel changes like this.
“The ones that did it successfully did it three or four years ago,” says Kaya Bromley, an attorney who helps employers comply with the Affordable Care Act. But, Bromley said, some of the restaurant owners who cut hours to sidestep the health law now regret it.
“A lot of the fast-food franchisees that did this,” she said, “are now coming back and saying, ‘It was a great idea for reducing the number of people that I have to offer benefits, but now I can’t run my restaurants.’”
So, to sum up: Trump has offered scant details about how he would replace ObamaCare. But what little he has said is philisophically consistent with the arguments in favor of single-payer, a policy approach that he has praised in the past.
The whole irony of this is that right now, Sanders and Hillary Clinton are in the midst of a heated debate in which Sanders is arguing in favor of single-payer and Clinton is saying it would go too far to be politically feasible.
Should Clinton and Trump be the nominees, it will have meant that Democratic voters will have rejected the candidate pushing single-payer health care and Republicans will have embraced him.
Today the Mercatus Center unveiled a study by Bradley Herring (Johns Hopkins University) and Erin Trish (University of Southern California) finding that the much-discussed health spending slowdown that continued in 2010-13 “can likely be explained by longstanding patterns” over more than two decades, rather than suggesting a recent policy correction. Projecting these factors forward and incorporating the effects of the Affordable Care Act’s health insurance coverage expansion provisions, Herring-Trish predict the expansion will produce a “likely increase in health care spending.”
Though not surprising in light of longstanding appreciation of insurance’s effects on health service utilization, the latter finding is nevertheless profoundly concerning given that pre-ACA health spending growth trends were already widely held to be untenable.
KEY FINDINGS
- At least 70% of the recent slowdown in health care spending per capita—and possibly as much as 98%—can likely be explained by long-standing patterns known to affect health care spending trends, not by new, unexplained conditions in the medical sector.
- Breaking down those figures, roughly 41% of the slowdown probably resulted from the decline in real per capita income because of the Great Recession.
- Other factors known to affect health care spending growth—such as changes in the number of physicians and hospital beds per capita and in the percentage of the population with insurance coverage—account for somewhere between 32% and 57% of the slower health care spending growth.
- The projected expansion of Medicaid coverage owing to the ACA will likely raise national health care spending in 2019 to about 1% higher than it would have been without the expansion.
Recently, Democratic presidential candidate Sen. Bernie Sanders released the outline of a plan to move to a single-payer health care system in the U.S. along with proposed tax increases intended to pay for the overhaul. According to the Sanders campaign, the plan would cost roughly an additional $1.4 trillion per year, or $14 trillion over ten years, and it would be financed through a combination of taxes on workers, employers, investors, estates, and high earners.
By CRFB’s rough estimates, Sanders’ proposed offsets would cover only three-quarters of his claimed cost, leaving a $3 trillion shortfall over ten years. Even that discrepancy, though, assumes that the campaign’s estimate of the cost of their single-payer plan is correct. An alternate analysis by respected health economist Kenneth Thorpe of Emory University finds a substantially higher cost, which would leave Sanders’s plan $14 trillion short. The plan would also increase the top tax rate beyond the point where most economists believe it could continue generating more revenue and thus could result in even larger deficits as a result of slowed economic growth.
A vote to overrule President Obama’s veto of a bill that would repeal key parts of the Affordable Care Act and take away federal funding from Planned Parenthood failed to gather a two-thirds majority on the House floor today.
The House voted 241-186 to override the veto. They would have needed 285 votes to do so. The override attempt was expected to fail, but Speaker Paul Ryan said taking the vote was important to show what the GOP could do with a Republican in the White House.