The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers

CBO projects that the combined federal spending on Social Security, Medicare, Medicaid, and the ACA subsidies will grow from 11 percent of GDP in 2016 to 16.3 percent of GDP in 2046. This run-up in spending will increase annual federal budget deficits and push cumulative federal debt to 141 percent of GDP in 2046 — well past the point that most economists would consider dangerous for the economy. (Spain’s debt is 99 percent of GDP in 2016).

CBO’s base case scenario is also probably too optimistic. CBO’s projection assumes federal revenue will grow from 18.2 percent of GDP in 2016 to 19.4 percent in 2046 (the 50-year average of federal revenue, from 1966 to 2015, was 17.7 percent of GDP). But the projected growth in federal revenue derives from tax provisions that are sure to change in coming years. For instance, under the ACA, a new 3.8 percent tax was imposed on non-wage income for persons with incomes over $200,000 annually and on couples with incomes over $250,000 per year. These thresholds are not indexed, which means more and more taxpayers, and, eventually, the middle class, will pay this tax as their incomes grow naturally with inflation.

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Hospital system Catholic Health Initiatives’ experiment with health insurance has hit the end of the road after a couple years of heavy losses. CHI is “exploring options to sell” its health plan subsidiary, executives said in new financial documents.

The documents, released this week to bondholders, explain that top CHI executives “decided to exit the health insurance business” in May after undergoing a strategic review in March. CHI’s consolidated insurance division, QualChoice Health, formerly known as Prominence Health, has hemorrhaged money since its inception. QualChoice sells Medicare Advantage plans and commercial plans to employers in six states.

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Aetna became the latest health insurer to cast doubt upon its future in the Affordable Care Act’s insurance exchanges after it called off a planned expansion Tuesday and suggested it could abandon that market completely.

A departure by Aetna, the nations’ third-largest insurer, could further reduce the number of choices for customers and eventually push insurance prices higher. Competition by insurers is a key feature of the exchanges, designed to keep a lid on prices, but several insurers are abandoning them because they are losing enormous amounts of money.

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Banning resident Jim Bailey and his wife went in recently for their annual physicals. They came away with hundreds of dollars in charges for co-pays and tests.

Bailey, 78, told me that he feels duped.

“The Affordable Care Act dictates that all annual physicals be provided at no cost to the policyholders — no deductibles or co-pays,” he said. “But that wasn’t the case with us.”

Nor will it be the case with anyone else — even though many Americans believe otherwise.

“There’s nothing in the ACA that guarantees a free checkup,” said Bradley Herring, an associate professor of health policy and management at Johns Hopkins University. “It’s surprising how many people think it’s part of the law.”

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The implementation of major legislation such as the Affordable Care Act (ACA) often results in fiscal outcomes that differ significantly from prior projections. Whenever this happens it leads to many questions, much confusion, and several claims and counter-claims. Rarely is it immediately clear whether the law is working differently than envisioned, or whether the unexpected outcomes are due to inevitable projection errors having nothing to do with the law.

On rare occasion, however, a prior projection proves so far off that its significance must be noted. Two weeks ago my colleague Brian Blase uncovered such a development with respect to the ACA’s Medicaid expansion. Recall that the ACA considerably expanded Medicaid eligibility – an expansion made optional for the states in a later Supreme Court ruling. It turns out that the 2015 per-capita cost of this Medicaid expansion is a whopping 49% higher than projections made just one year before.

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Former adviser to the president for health policy explains why he was wrong about how the change in the delivery of health care would, and should, happen: “I believed then that the consolidation of doctors into larger physician groups was inevitable and desirable under the ACA. . . . I still believe that organizing medicine into networks that can share information, coordinate care for patients and manage risk is critical for delivering higher-quality care, generating cost savings and improving the experience for patients. What I know now, though, is that having every provider in health care “owned” by a single organization is more likely to be a barrier to better care.”

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The Kaiser Family Foundation’s most recent Employer Health Benefits Survey found that among firms with 50 or more full-time-equivalent workers (i.e., the one’s subject to Obamacare’s employer mandate):

“four percent of these firms reported changing some job classifications from full-time to part-time so employees in those jobs would not be eligible for health benefits”

and

“four percent of these firms reported that they reduced the number of employees they intended to hire because of the cost of providing health benefits” . , and 10% of firms reported doing just the opposite and converting part-time jobs to full-time jobs”

This is unequivocal empirical evidence that Obamacare has had some of the adverse effects on employment predicted for years by Obamacare critics: a shift towards part-time work and even a reduction in hiring.  But according to the same survey, the latter impact was offset due to the 10% of employers who converted part-time jobs to full-time jobs in order to make them eligible for health benefits.

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Small businesses have been pumping the brakes on offering health benefits to their employees since 2009, according to new data from the Employee Benefit Research Institute.

“The fact is that small employers were less likely to offer these benefits to begin with,” Paul Fronstin, EBRI’s director of health research and education program and author of the report, told Bloomberg BNA July 28. “While the ACA was designed to try to get more small employers to” offer health insurance, “it hasn’t.”

The proportion of employers offering health benefits fell between 2008 and 2015 for all three categories of small employer, EBRI found: by 36 percent for those with fewer than 10 employees, by 26 percent for those with 10 to 24 workers and by 10 percent for those with 25 to 99 workers.

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Democratic and Republican governors know that rising health care costs are increasingly restricting spending on other state priorities. Paul Howard, Director of Health Policy at the Manhattan Institute, outlines five strategies that innovative governors can use to help transform state health care markets: 1. Incorporate reference pricing for common procedures and tests into state benefit designs, 2. Ban anti-tiering provisions, 3. Drive price transparency by setting up an all-payer claims database, 4. Expand access to direct primary care, and 5. Repeal regulations that hamstring competition, such as certificate of need laws and prohibitions on the corporate practice of medicine.

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Healthcare policy got remarkably little discussion during the Democratic National Convention in Philadelphia, despite repeated nods to the issue from Hillary Clinton, Barack Obama, and Bernie Sanders. Here’s why.

No one wanted to talk about the costs, regulations, and other tough tradeoffs that would be involved in further expanding insurance coverage under the Affordable Care Act, improving affordability for consumers, curbing medical spending growth, and reducing prescription drug costs.

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