Category: New Health Care Law

Three Conservative Ideas Buried within Obamacare

Caduceus with First-aid KitThe Affordable Care Act is the worst piece of legislation ever passed into law in the United States. However, it does open up some doors that were firmly locked before — things that most free-market economists have been espousing for years without success. We should not run away from those things just because they have President Obama’s name on it.

I am not talking about the things the idiot media think are popular — the slacker mandate, open enrollment, equal premiums for men and women, and free “preventative” services.

However, I see three conservative ideas buried in Obamacare. Read about all three in my column in The Federalist.

The Verdict Is In?

Politico‘s headline was unambiguous ― “The verdict is in: Obamacare lowers uninsured.”

Well, my goodness, I would certainly hope so after spending several hundred billions of dollars to do just that. We can’t be sure how much has been spent so far, but the legislation called for over $1,000 billion over ten years. Let’s see ― it has been in effect for four years now, so is that $400 billion so far?

The Politico article reports that the Commonwealth Fund estimates 9.5 million fewer uninsured, and the Urban Institute finds 8 million newly insured adults. Let’s round it up to ten million. That would make $40,000 for each newly insured person. Wow!

Of course, there are some problems with even these optimistic numbers. Chris Conover delves deeply into the methodology in Forbes. But I want to add a few other observations –

Commonwealth Fund: 57 Percent of People Potentially Eligible for Obamacare Coverage Have Still Not Visited Exchange

A few days ago, the pro-Obamacare Commonwealth Fund released a report, Gaining Ground, cheerleading the results of Obamacare so far. Even the New York Times was a little guarded in its reception of the report, opining:

Most of the newly insured people had no trouble finding a primary care doctor, and most waited less than two weeks for an appointment. Whether that will hold true when millions more patients flood into the market remains to be seen.

That’s for sure. What the Commonwealth Fund report really confirms is what this blog has maintained for a long while: Obamacare exchanges attracted people in immediate need of medical care. 60 percent of those who enrolled have seen a doctor, been to a hospital, or filled a prescription. On the other hand, 57 percent of people potentially eligible for Obamacare coverage have still not even visited a health-insurance online exchange (Exhibit 6). And that figure is for the period starting April 1, when the full-court press to enroll everybody was at its fiercest.

Obamacare’s Risk Corridors Protect Profits, Not Patients

On June 18, I testified to the House Committee on Oversight and Government Reform on Obamacare’s risk corridors. I was honored to join a panel alongside Edmund Haislmaier of the Heritage Foundation, which has just published his testimony. Mr. Haislmaier defined Obamacare’s three risk-mitigation provisions — reinsurance, risk adjustment, and risk corridors with unique clarity:

The first is what can be termed “market selection risk.” This risk arises when customers have a choice between two or more markets with different characteristics. In the case of the PPACA, the most obvious examples are decisions by employers about offering coverage. The PPACA now makes it possible for employers to discontinue group plans (without penalty in the case of firms with 50 or fewer workers) and instead send their employees to the exchanges to obtain new, subsidized coverage as individuals.

Thus, the PPACA’s reinsurance program can be seen as principally designed to address market selection risks by taxing the much larger employer group coverage market to provide additional subsidies to the individual market.

How Many Uninsured Texans Signed Up For Obamacare? Maybe 3 Percent of Those Eligible

The Left often attacks Texas as a holding pen of uninsured people. 5.7 million residents do not have health insurance. Yet only 733,757 signed up for Obamacare. And many of them dropped or lost insurance that they had before Obamacare launched. John Davidson of the Texas Public Policy Foundation figures that maybe only three percent of eligible, uninsured Texans signed up for Obamacare. According to Davidson, “The most likely reason is cost. Premiums on the exchange are significantly higher than average pre-ACA premiums on the individual market in Texas. Although subsidies offset these premium costs for some Texans, those earning about 250 percent of the federal poverty limit (FPL), or $29,175 per year, cannot expect their subsidy to significantly reduce premiums.”

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Health Spending Has Grown Slower in the U.S. than in Other Developed Countries, 2007 -2011 (But It Won’t Last)

We have been skeptical that Obamacare explains the slow rate of growth in health spending. A new research paper by Luca Lorenzoni and colleagues, from the Organization for Economic Co-operation and Development confirms not only that the slowdown occurred well before Obamacare, but that the effect was stronger in the U.S. than in Canada, France, Germany, the Netherlands, and Switzerland.

The report shares some disturbing data:

  • Government-health spending as a share of all U.S. health spending increased by 4.8 percentage points, from 44.0 percent (2000) to 48.8 percent (2011), whereas it shrank somewhat in Canada, France, and Germany;
  • Despite the growth in consumer-driven health care, in the U.S., the share of spending paid directly out-of-pocked dropped by 2.1 percentage points, from 14.2 percent (2003) to 12.1 percent (2011), whereas it increased somewhat in Canada and France;
  • Health administration and health-insurance share of government-health spending increased by 1.2 percentage points, from 5.1 percent (2000) to 6.3 percent (2011), whereas it shrank in Canada, France, Netherlands, and Switzerland.

“We Are Trying to Come Up with Theories”: The “Final” First Quarter GDP Estimate May Not Be So Final After All

This blog noted that Obamacare led the Bureau of Economic Analysis to make a seriously flawed estimate of health spending in the first quarter of 2014. Instead of an initial growth in Gross Domestic Product (GDP), and  revised drop of one percent , the “final” estimate was a drop of 2.9 percent annualized, Well, according to the New York Times, there are still “baffling contradictions” in the data on health spending that might lead to a remarkable revision of the “final” estimate:

Behind that reversal were the results of a quarterly survey of service providers. The survey, conducted by the Census Bureau, asks 18,000 companies in 11 service industries about their revenue and expenses. Health care providers, including physicians and hospitals, reported a decline in revenue from the previous quarter.

Eventually, there will be a more comprehensive annual survey, which could change the numbers…Mr. Mandel, the B.E.A. economist, said the bureau was trying to figure out what happened. “On the why, I don’t have a clear answer,” he said in an interview. “We are trying to come up with theories.”

ObamaCare: The Perfect New-Keynesian Policy Prescription?

University of Chicago finance professor John Cochrane believes that slow economic growth “trumps every other economic problem.”

He and a number of macroeconomists believe that the Keynesian model drilled into your head in Econ 1 has a number of shortcomings that make it produce lousy economic policy, even in its New-Keynesian version. Shortcoming number one is that the New-Keynesian models do a very poor job of explaining reality. Just how poor a job is shown in the graph below.

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Another Cover-Up? IRS, Social Security Administration Not Co-Operating with Investigation of Fraudulent ObamaCare Enrollment

At the beginning of last month, this blog discussed the fact that over two million (of a total of eight million) ObamaCare applications lacked income, citizenship, or immigration data to verify eligibility for ObamaCare’s tax credits. In the middle of the month, the Administration began contacting “hundreds of thousands of people with subsidized health insurance to resolve questions about their eligibility, as consumer advocates express concern that many will be required to repay some or all of the subsidies.”

Now, the Inspector General (IG) of the U.S. Department of Health & Human Services has confirmed that “The deficiencies in internal controls that we identified may have limited the marketplaces’ ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment…”

That’s putting it mildly. Far worse is that the IG is unable to investigate eligibility based on income or residency because the IRS and Social Security Administration appear not to be co-operating with his investigation (pp. iv-v):

Will These Two Solutions Fix ObamaCare?

Caduceus with First-aid KitObamaCare apologists continue to insist that things are going swimmingly. However, they are also finding pretty creative ways to fix the problems that continue to plague the enterprise. As this blog has long noted, a major problem is that health insurers offering ObamaCare policies appear to be enrolling significantly sicker beneficiaries than they had anticipated. This is why ObamaCare has a “bailout” so that they don’t lose too much money. This state of affairs is especially painful to insurers because they have designed their ObamaCare policies to attract the healthy and repel the sick — which has not worked. Nor did the insurers succeed in imposing a rule preventing hospitals from enrolling patients in ObamaCare policies. Anecdotes suggest that hospitals invested serious effort in enrolling the sickest uninsured patients in the new policies.