The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
There is a political duty to prevent the coming bailout of big health insurers if Congress is serious about achieving repeal of ObamaCare. Individual Americans who have been harmed by the health care law aren’t eligible for an administration-provided bailout. Nor did doctors get help with the increased costs of bureaucratic compliance. Instead, the administration gave top priority to the interests of its corporate friends and supporters. This is crony capitalism at its worst.
The Affordable Care Act will make the labor supply, measured as the total compensation paid to workers, 0.86% smaller in 2025 than it would have been in the absence of that law, the Congressional Budget Office estimates. Three-quarters of that decline will occur because of health insurance expansions, which raise effective tax rates on earnings from labor—for instance, by phasing out health insurance subsidies as people’s income rises—and thus reduce the amount of labor that workers choose to supply.
ObamaCare is expected to cost the U.S. workforce a total of 2 million jobs worth of hours over the next decade, the Congressional Budget Office said Monday. The total workforce will shrink by just under 1% as a result of the new coverage expansions, mandates and changes in tax rates, according to the report.
To stay on the path of repeal and replace, ObamaCare opponents need to address three critical aspects of the effort. First is the question of risk-corridor payments under ObamaCare. These are the payments made to insurers with “excessive” losses from the plans they offer on the exchanges. A second important question is the “Cadillac” tax, which imposes a 40% excise tax on plans with premiums above certain dollar thresholds, and which would be fully repealed by the bill Congress will send the president. A third important question concerns another key feature of any credible replacement plan: tax credits.
Since the Affordable Care Act was implemented, the number of hospital merger and acquisition deals jumped from 52 in 2009 to more than 100 in 2014, according to Irving Levin Associates. But the economic evidence suggests consolidation drives costs up, not down – and may even hurt patient care. Two thorough literature reviews, from 2006 and 2012, found that hospital consolidation generally results in higher prices. And when hospitals merged in already concentrated markets, the price increase was dramatic, often exceeding 20%. If policymakers don’t find more ways to inject competition into hospital markets soon, bigger price increases are likely waiting just a few years down the road.
Last week, the Centers for Medicare and Medicaid Services released its official estimates of the uninsured population and of health spending. In 2014, ObamaCare’s coverage expansion fell between 6 and 12 million short of expectations, while driving the growth of health spending to its highest rate in 7 years. ObamaCare has only reduced the percentage of U.S. residents without health insurance by about 2%: a remarkably small number, and far lower than what the law was supposed to achieve.
The Justice Department last month asked the Supreme Court to review a preliminary injunction blocking the Obama administration from implementing the president’s immigration executive order, which would defer deportations for up to five million undocumented immigrants. Employers aren’t required to offer ObamaCare coverage or subsidies to these immigrants. The statutory language in the Affordable Care Act says that only “lawful residents” are eligible, and the government’s petition specifically notes that the immigration action does not “confer any form of legal status in this country.” In short, companies will be encouraged to hire these immigrants over U.S. citizens.
ObamaCare is performing worse than expected when it became law: plans are less attractive, enrollment is lower, premium increases are higher, and risk pools are sicker. Medicaid expansion is a key problem with the law. The main problem with Medicaid, which existed before the ACA took effect, is that enrollees receive little value from the program. The joint federal-state health care program needs large scale reform so that it provides better value for both enrollees and taxpayers.
Democrats like to talk a lot about being the party of choice, but under Obamacare, individuals are finding their choices increasingly limited. At its core, Obamacare forces individuals to purchase government-approved insurance policies and precludes them from buying plans that might be more in line with their healthcare needs. Though Obamacare’s defenders argue that the requirements imposed on health insurance plans only serve to guarantee that individuals have better coverage, in reality, what’s happening is that the law is driving insurers to limit choices.
The GOP has big reasons to move ahead with sending an ObamaCare repeal to President Obama’s desk: it will force the president to veto the bill, will fulfill a promise to its base, and will lay the groundwork to truly repeal the health care law under a Republican president in 2017. It’s not just optics. Republicans are carefully constructing a legislative strategy, based on Senate rules and precedents, to make it easier to unravel the health law in 2017 if a Republican wins the White House.