The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
As Congress readies legislation to repeal and replace the Affordable Care Act (ACA), Congressional Budget Office (CBO) estimates will play an important and respected role as they did in the passage of the law in 2010. We now know that many of CBO’s projections of important aspects of the ACA have significantly differed from actual outcomes. In this piece, I highlight CBO’s key past errors in projecting effects of the ACA. They can largely be grouped into two categories. First, CBO projected that the exchanges would be stable by now with more than twice as many enrollees as they currently have, rather than suffering from severe adverse selection in most states as they now are. Second, CBO projected that the ACA Medicaid expansion would be much smaller and less expensive than it has turned out to be.
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Cost overruns are endemic to government health programs, and ObamaCare is turning out to be no different. Not only are its Medicaid expansion costs exploding, skyrocketing premiums are now pushing insurance subsidy costs through the roof.
A new study from the Center for Health and Economy finds that because of the double-digit premium increases across the country, federal spending on ObamaCare’s insurance subsidies will shoot up by nearly $10 billion next year
That’s because the amount of the subsidy is directly tied to the cost of insurance in any given market. The Obama administration treats this as a cardinal virtue of ObamaCare, because the subsidies largely shield eligible enrollees from premium rate shocks. In fact, the administration has argued that higher premiums are a good thing, because they make more people eligible for those subsidies.
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In the midst of open enrollment for Obamacare, there is plenty of bad news for health law supporters, from skyrocketing premium rates to diminished insurer participation. Public opinion remains steadily opposed to the law.
After a fluid first few months in 2009 as the plan got underway in Congress, public opinion of Obamacare settled into a consistent trend in early 2010, with opposition outweighing support—often by a sizable margin.
Gallup’s tracking, for instance, shows that since the law took effect in 2013, a majority of Americans have consistently disapproved of it, ranging from a low of 48 percent in July 2015—just after the Supreme Court’s ruling upholding the law’s federal subsidies—to a high of 56 percent.
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During 2015, the growth in both individual-market and employer-group coverage resulted in a net increase in private-market coverage of 2 million individuals. For individual-market policies, enrollment increased by a bit more than 1.12 million individuals. For the employer-group-coverage market, enrollment in fully insured plans declined by 932,000 individuals, while enrollment in self-insured plans increased by 1.86 million individuals. The net effect of those changes was an increase of 926,000 in the number of individuals with employer-sponsored coverage in 2015.
Public program enrollment in Medicaid and the Children’s Health Insurance Program (CHIP) increased by almost 2.77 million individuals in 2015. As in 2014, the change in Medicaid enrollment in 2015 differed notably between states that adopted the ACA’s Medicaid expansion and states that did not. States with the ACA’s Medicaid expansion in effect experienced Medicaid enrollment growth of almost 2.13 million people, while in the states without the expansion in effect, Medicaid enrollment grew by 640,000 individuals.
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One of the most frequently heard claims from the Obama administration is that Obamacare is responsible for insuring 20 million adults who were previously uninsured. But Heritage Foundation research shows the administration’s figure is off by a few million.
It is important to note that the administration’s coverage estimates are based on survey data rather than calculating the actual change in coverage in different markets. Though surveys can provide useful information, they are not as precise as using enrollment data taken directly from insurance companies.
A recent analysis by The Heritage Foundation’s Edmund Haislmaier and Drew Gonshorowski uses the more accurate method, taking actual enrollment data from Medicaid and private insurance companies to assess the impact Obamacare has had on coverage.
The researchers found that just over 14 million people gained coverage from the end of 2013 to the end of 2015. Of those 14 million, 11.8 million gained their insurance through Medicaid and 2.2 million through private coverage.
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In a recent podcast, Weekly Standard editor Bill Kristol made the observation:
if Obamacare had worked, Hillary Clinton would be the president-elect, right? I do think those those premiums going up two weeks before the election probably moved the necessary number of votes.
That got me to thinking how one might prove this empirically. The short answer is that I cannot prove this proposition beyond a shadow of a doubt, but the evidence is stronger than one might suppose.
To be sure, national exit polls showed that the most important issues in this campaign were the economy (52%), terrorism (18%), immigration (13%) and foreign policy (13%). However, according to David Wasserman’s definitive vote tallies at Cook Political Report, a swing of only 38,595 votes in 3 states (MI, PA, WI) would have given the election to Hillary Clinton. This represents 0.0293% of votes cast, making it the 7th closest presidential election in history in terms of this metric (p. 330). The issue for our purposes here is whether we could make a good case that Obamacare was the factor that led these crucial election-deciding voters to pull the lever for Trump rather than Clinton.
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Hospitals and health insurers are gaining confidence that their nightmare scenario – millions of Americans instantly losing health insurance once President-elect Donald Trump delivers on a promise to “repeal and replace” Obamacare – is looking more like a bad dream than becoming reality.
The early view from the healthcare sector still includes an end eventually to President Obama’s signature health program.
But Trump’s picks to head the U.S. health department and its top regulator on Tuesday, along with his recent softening on some aspects of the existing law, is a sign to some sector insiders that instead of chaos, an orderly transition of up to three years to replace it with a plan that healthcare companies actually want could be in store.
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With Trump’s election, there is suddenly a lot of question about the fate of Obamacare. Will it be repealed, in part or in whole? And if so, replaced with what?
One place to look for answers is in a new article about Obamacare’s coverage expansion. Learning more about what has already happened with Obamacare turns out to provide some clues about what may happen to it in the future.
That’s because Molly Frean, Jonathan Gruber and Benjamin D. Sommers provide a detailed look, not just at the amount of coverage expansion but also the sources of it. According to the authors’ analysis, they can explain about 70 percent of the decline in the number of uninsured people through three factors: the subsidies for buying insurance; the law’s more generous criteria for Medicaid eligibility; and the “woodwork effect,” in which people who were previously eligible for Medicaid “came out of the woodwork” and signed up for the program in 2014.
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Recent economic research calls into question the value of ObamaCare’s Medicaid expansion, and indeed the entire Medicaid program. In one study, MIT health economist Amy Finkelstein and her colleagues found that Medicaid produced no discernible improvement in enrollees’ measured physical health outcomes. In another, Finkelstein and colleagues estimated enrollees receive only 20-40 cents of benefit for every dollar the program spends.
Researchers at The Economist went looking for factors to explain why Donald Trump outperformed Mitt Romney’s showing in key states four years prior. They found ”the single best predictor identified so far of the change from 2012 to 2016 in the share of each county’s eligible voters that voted Republican” is how low the county scores on an index of public health measures.
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On Donald Trump’s victory Republicans in Congress are primed for an ambitious agenda, and not a moment too soon. One immediate problem is ObamaCare’s expansion of Medicaid, which has seen enrollment at least twice as high as advertised.
Most of the insurance coverage gains from the law come from opening Medicaid eligibility beyond its original goal of helping the poor and disabled to include prime-age, able-bodied, childless adults. The Supreme Court made this expansion optional in 2012, and Governors claimed not joining would leave “free money” on the table because the feds would pick up 100% of the costs of new beneficiaries.
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