The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
The decision states face of whether to expand Medicaid to non-disabled, working-age, childless adults—the Affordable Care Act primary expansion population—involves tradeoffs. These tradeoffs include higher taxes, reduced spending on items like education, transportation, or infrastructure, or reduced spending on other Medicaid populations such as the disabled, children, or the elderly. The ACA funding formula allows states to pass a much greater share of the costs of covering non-disabled childless adults to federal taxpayers, but the tradeoffs still exist.
On Sunday, January 17—hours before the Democratic presidential debate on NBC—Vermont Senator Bernie Sanders released details of his proposal to replace the entire U.S. health care system with a universal, government-run, single-payer one. In Sanders’ eight-page campaign white paper, entitled “Medicare for All,” the self-described “democratic socialist” outlines his plan’s core principles.
Warren Gunnels, Sanders’ policy director, retained Gerald Friedman, an economist at the University of Massachusetts at Amherst, to come up with a fiscal score of the Sanders plan. Friedman estimates that the plan would require $13.8 trillion in new government spending in the decade spanning 2017 through 2016. Avik Roy of the Manhattan Institute outlines why that estimate is far too low.
While Democrats are quite eager to point out that ObamaCare has reduced the number of uninsured by 17.6 million, they have conveniently failed to point out that in 2014, American taxpayers effectively paid about $6,000 for each person who became newly covered due to ObamaCare.
Is it really worth reducing worker wages by $1,200 apiece just to cover 2.3 million young adults? And leaving aside all the chaos created by millions of cancelled policies, premium increases paid by tens of millions who received no taxpayer subsidies whatsoever to soften the blow and similar market dislocations, are ObamaCare defenders really prepared to claim that it is worth paying $6,000 apiece to reduce the ranks of the uninsured?
The percentage of people without health insurance held steady in 2015, according to the Gallup polling organization, which last week announced that the un-insurance rate remained “essentially unchanged” throughout 2015. That wasn’t good news for the administration, which had hoped the pollster would confirm that ObamaCare had significantly reduced the un-insurance rate in 2015. Doug Badger, Senior Fellow at the Galen Institute, digs deeper by comparing the Gallup poll with government surveys conducted by the Centers for Disease Control and the Census Bureau.
The ObamaCare “risk adjustment” program was designed to support health plans with lots of sick, expensive customers by giving them money from plans with healthier customers. The goal is to help keep insurance markets stable by sharing the “risk” of sicker people and removing any incentive for plans to avoid individuals who need more medical care. Such stability is likely to encourage competition and keep overall prices lower for consumers, while its absence can undermine both and limit coverage choices—the basic principles of the law.
Yet the way the Obama administration has carried out this strategy shows another unexpected consequence of the 2010 health care law. Critics say the risk adjustment program is having a reverse Robin Hood effect—taking money from some plans that are small, innovative or fast-growing, while handing windfalls to some of the industry’s most entrenched players.
In his final State of the Union address, President Obama spent little time discussing health care programs. In sum, the president made one generic reference to Medicare, made no mention of Medicaid, and spent only about 30 seconds discussing his signature health care legislation—the Affordable Care Act—recapping its main purpose and making three claims about how it is performing.
The president claimed that the purpose of the ACA Is to ensure portability of coverage, that health care inflation has slowed, and that nearly 18 million people have gained coverage so far. He also claimed that businesses have created jobs every single month since the ACA became law. He failed to mention the nation’s greatest fiscal challenge: the unsustainability of entitlement programs.
This piece by Brian Blase aims to fill in some of the gaps.
Reconciliation shows repeal is possible. Now is the time to show that replacing ObamaCare is possible too. To do that, Congress should spend the next year building a framework for a patient-centered, market-based alternative that empowers individuals to control the dollars and decisions regarding their health care. Congress must use sound financing, stabilize and liberate the health care market, and make financing simpler, transparent and direct to individuals.
Among ObamaCare’s few popular features, even among Republicans, is the mandate to cover adult children through age 26 on the insurance plans of their parents. Although sold as a gratuity, somebody must ultimately pay. In a working paper, Gopi Shah Goda and Jay Bhattacharya of Stanford and Monica Farid of Harvard find “evidence that employees who were most affected by the mandate, namely employees at large firms, saw wage reductions of approximately $1,200 per year.”
Kentucky’s new Republican governor, Matt Bevin, has notified the Obama administration that he plans to dismantle the state’s ObamaCare marketplace. Bevin, who was sworn in last month, promised to scrap the marketplace, called Kynect, as part of his campaign, but he is now making it official. Bevin’s office said in a statement to WFPL News in Kentucky that having the state run the marketplace is a “redundancy.”
The health care law is gradually finding its niche as an entitlement for what the Census Bureau defines as the “working class”–lower middle-class families that earn too much to qualify for Medicaid, but instead fall into the sweet spot of ObamaCare’s subsidies. Increasingly, these Americans will find themselves forcibly moved into ObamaCare, even if they currently have coverage sponsored by their employers.
A key number to watch from this year’s enrollment season is the percentage of enrollees who receive cost-sharing subsidies. It’s a fair bet that this will be the only number that rises by a notable margin over last year even as the rest of the program stalls. In the end, Americans are rational economic actors. Not only when it comes to who avoids the ObamaCare scheme, but who gets drawn into its grips.