The main objective of the Affordable Care Act (ACA) was to increase enrollment in health insurance among those who were previously uninsured. Official estimates from the Census Bureau have consistently overstated the number of people who are uninsured. A major factor in the overestimate is the undercount of people in Medicaid. Also, millions of Americans have been officially uninsured despite their eligibility for public insurance or employer coverage. With the passage of the ACA, fewer than 10 percent of the remaining uninsured do not have a realistic path to securing health insurance. The future of the ACA is now uncertain, but any future policy changes will likely need to provide a sure path to insurance coverage for all Americans as well.
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In this space nine months ago, I proposed 5 questions every presidential candidate should answer on health care. Well, the delivery date for Election 2016 arrives tomorrow, and the questions remain “Asked and Not Answered.” There never was much of an effort by the two leading nominees, Hillary Clinton and Donald Trump, to respond directly, but one still might infer some rough parameters from their various omissions, evasions, and obfuscations. Given the lack of attention to health policy, let alone health policy details, by Trump, we will also assess the outline of House Republicans proposals for health reform embodied in the “A Better Way” documents released last June.
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The problems emerging in the exchanges are a symptom of a larger disease, which is that the ACA moved far too much power and regulatory control over the health sector to the federal government. Building a broader consensus around reform of the individual insurance market will almost certainly require revisiting other fundamental aspects of the ACA that have sharply divided policymakers.
The ACA exchanges will not be able to continue indefinitely without substantial reform. But reform will only be possible if the American public believes that this will not merely be another intrusion into their personal health decisions and their wallets. It will be up to Congress and the next President to decide if America’s health care system is worth the political risk needed to enact responsible and necessary reforms.
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Two issue briefs published today by The Commonwealth Fund and authored by several RAND Corporation economists (led by Christine Eibner) will be noted by casual readers for their presumably “scientific” conclusions that (1) a set of Clinton proposals will increase the number of insured Americans by over 9 million and decrease average spending by up to 33% for those with moderately low incomes; and (2) a sketchy set of Trump policy stances would increase the number of uninsured individuals by 16 million to 25 million relative to the current-law ACA baseline and disproportionately affect low-income individuals and those in poor health.
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Several RAND Corporation health economists have offered very rough estimates of the coverage and cost effects of the hazy health policy proposals by the two major presidential candidates, Hillary Clinton and Donald Trump. In choosing to fill Trump’s policy vacuum with their own void of limited health policy modeling, the RAND researchers conclude that Trump’s proposals would increase the number of uninsured individuals within a range of 16 to 25 million individuals (relative to current-law ACA arrangements), with disproportionate losses suffered by those with low incomes or in poor health. However, Trump doesn’t spend much more taxpayer money to achieve these results, and his plans in health policy would increase the federal deficit by somewhere between $0.5 billion to $41 billion.
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If Donald Trump is elected president, one thing that is fairly certain is that we’d hear loud calls from some quarters for the incoming administration and Congress to move quickly in 2017 on a “clean” repeal of Obamacare. “Clean” means that the bill would go as far as possible to repeal the health care law without being encumbered politically by new provisions to replace it. Some conservatives will advise against embracing any new reform because of the political risk, but lawmakers should ignore this advice. If GOP leaders pass up the chance to pursue a market-based approach to health reform when given the chance, they will have no one to blame but themselves as U.S. health care slides inexorably toward full governmental control in coming years.
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The Congressional Budget Office’s latest long-term forecast, released last month, is a bracing report. As President Obama’s term comes to end, CBO finds that the federal government is on track to run up historically large deficits over the coming three decades, pushing federal debt to 141% of GDP, up from 39% in 2008.
The president has mostly avoided talking about the federal budget during his time in office, but he did promise that the Affordable Care Act — ObamaCare — would help lower deficits in the short and long term. CBO backed him up on this claim in 2010, estimating that the deficit would be reduced by 0.5% to 1.0% of GDP over the medium term. But the agency’s new forecast shows why the law is more likely to make the deficit worse, not better.
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A new report in Health Affairs has found that the smoking penalties imposed by the Obamacare health plans have not succeeded in getting smokers to quit. Even worse, the penalties have deterred some smokers from obtaining health insurance in the first place.
The health insurance plans offered on the exchanges established by the Affordable Care Act (ACA) cover smoking cessation treatment with no cost sharing. As a further “nudge” to quit smoking, the insurance plans charge tobacco users up to 50 percent more in premiums than non-users. For purposes of the surcharge, a Department of Health and Human Services regulation defines tobacco use as self-reported consumption of “any tobacco product, including cigarettes, cigars, chewing tobacco, snuff, and pipe tobacco, four or more times a week within the past 6 months.”
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Another day, another healthcare co-op failure. In July alone, three co-ops, HealthyCt in Connecticut, Community Care of Oregon, and Land of Lincoln in Illinois announced they are closing up shop. They join 13 other failed co-ops out of the original 23 that were a centerpiece of the Affordable Care Act’s vision for the future of healthcare organization — an unrealistic vision based on wishful thinking and sabotaged by the ACA itself.
The ACA created Consumer Operated and Oriented Plans (co-ops) — private, state licensed, non-profit health insurance companies — to provide low-cost, consumer friendly coverage to individuals and small businesses. The theory was that since the co-ops didn’t have to show a profit, they could charge lower premiums, provide more services and be more responsive to their members. They would use collective purchasing power to lower administrative and information technology costs and keep members healthy through preventive care and evidence-based medicine.
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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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