Hold the Obamacare Celebrations
President Barack Obama and his allies are celebrating the Affordable Care Act, also known as Obamacare, on the sixth anniversary of its passage. They say it has provided insurance coverage to millions of Americans and come in below cost.
They are right to claim that many Americans have benefited from the law. But the benefits are overstated, and the law's harms look set to rise.
The drop in the number of Americans without insurance is the biggest accomplishment. But that decline has not been as large as originally estimated. When the law passed, the Congressional Budget Office predicted that by the end of 2015 an additional 15 million people would be getting coverage through Medicaid and 13 million would be getting coverage through the exchanges. Now CBO says that 10 million additional people were on Medicaid, and the administration says that 8.8 million were on the exchanges, in 2015.
Still, those are real gains. The people covered now have a measure of financial security they had not previously enjoyed. Yet Medicaid coverage does not appear to be associated with significant improvements in recipients’ physical health. And the benefits are low compared with the costs: A recent study found that every dollar spent on the program yielded 20 to 40 cents in benefits.
Other people have seen their financial security reduced because of Obamacare. Deductibles in employer health plans have been rising fast, leaving many people with policies that -- thanks to Obamacare regulations -- cover routine medical expenses but leave them on the hook for thousands of dollars in a medical emergency. A sensible insurance policy would have the opposite priorities.
Obama famously said that Obamacare would bring family premiums down by $2,500. That hasn’t happened, of course: Average family premiums for employer coverage went to $17,545 in 2015 from $13,375 in 2009. The administration argues that the law has contributed to a slowdown in the growth of health spending. But that slowdown started in 2002. Obamacare can’t be the cause. The best that can be said about the law's effect on health spending is that its early years haven't interrupted that slowdown.
The Congressional Budget Office believes that the law is having a negative effect on employment. It projects that Americans next year will work the equivalent of 2 million fewer jobs because of the law. That’s partly because the law’s subsidies decline when people work more. The subsidies thus reduce the rewards to work and induce people to work less.
More Americans dislike Obamacare than like it, which has been the case since before its passage. More think the law has hurt them than think it has helped them. And as flawed as the law already appears, worse days may be ahead for it.
The law’s health exchanges are showing signs of trouble. Enrollees are poorer and older than expected, which means the tax for being uninsured may not be succeeding in its aim of getting healthy people to sign up. If so, the exchanges could prove incapable of sustaining themselves.
Obamacare was supposed to pay for itself, but several features of the law that were meant to bring in revenue have proven as politically unrealistic as critics said. Congress has already suspended the law’s medical-device tax and its tax on high-end, employer-provided insurance plans in a bipartisan deal.
Obamacare was a badly designed law. We could have achieved gains in insurance coverage without Obamacare’s regulation-heavy approach; we could have addressed the health-care system’s discrete problems without trying to overhaul it from Washington, D.C.
Those without access to employer health plans could have been given enough money to buy a policy that protected them against catastrophic expenses -- and that offered more protection if they put some of their own income into the policy. Modest regulatory changes could have been made to make it easier for people with pre-existing conditions to get coverage, too.
Neither Republicans nor Democrats, for different reasons, were interested in going down that path when Obamacare was being debated. Now, belatedly, some Republicans are interested in moving the health system in this direction. The Democratic response to dissatisfaction with Obamacare, on the other hand, is likely to be to blame the law’s failures on health-care providers and seek tighter regulations of them.
One way or the other, though, Obamacare will probably have to be changed substantially under the next president -- even if Democrats, amid their anniversary celebrations, are loath to admit it.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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