The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
Sen. Sanders claims he can provide free health care for all Americans even while saving $6.3 trillion over the next 10 years. In truth, the actual cost of the Sanders health plan will be at least 40% more than he claims. In the worst case, it will be 49% higher.
Moreover, the increase in federal taxes required to fund his plan will not be the $13.8 trillion claimed by the economics professor who is advising Sanders, nor even the $28 billion estimated by fellow Forbes colleague Avik Roy: the new federal taxes required to fund the Sanders health plan will be $36.3 trillion!
In short, the Sanders health plan would require a 71% increase in federal spending over the next decade.
In their final debate before they face Democratic primary voters, Hillary Clinton and Bernie Sanders traded sharp jabs on health care. Pundits focused on how the barbs would affect the horse race, whether Democrats should be bold and idealistic (Sanders) or shrewd and practical (Clinton), and how Sanders’ “Medicare for All” scheme would raise taxes by a cool $1.4 trillion. (Per. Year.) Almost no one noticed the obvious: the Clinton-Sanders spat shows that not even Democrats like the Affordable Care Act, and that the law remains very much in danger of repeal.
Major insurer UnitedHealth, which caused a stir in the fall by saying it might leave ObamaCare, lost $720 million from the individual health insurance market last year. UnitedHealth said in its financial report released Tuesday that the $720 million comes from losses “related to the individual exchange-compliant insurance business.” About $245 million of that money was for “advance recognition of losses” in 2016 in the individual marketplace.
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.