ObamaCare Defenders Deny Reality

 

Never let the facts get in the way of a good story. That seems to be the mantra of Democrats that continue to defend ObamaCare. They seem more interested in winning the debate than providing Americans with improved healthcare. How else to explain their refusal to acknowledge the failures of ObamaCare?

The current talking points of the left focus on two points: increased insurance coverage and lower healthcare expenditures. To the large mass of Americans who are uninformed these may seem like persuasive arguments. But to those who take the time to analyze these claims the arguments fail to hold water.

Increased Insurance Coverage

Cliff Asness, managing and founding principal of AQR Capital Management, refutes these points well in a recent Wall Street Journal column. He notes that President Obama declared in his March 25 speech marking the 5th anniversary of passage of the law that “we know beyond a shred of a doubt that the policy has worked.” Among the alleged accomplishments he cited is that “coverage is up.”

The Department of Health and Human Services (HHS) said last month that 16.4 million people have gained insurance thanks to the Affordable Care Act (ACA). HHS Secretary Sylvia Matthews Burwell declared “the largest reduction in the uninsured in four decades.”

Asness points out correctly that this is hardly an accomplishment. He says,

If you mandate that people buy something, penalize them if they don’t and give it away to some, more people will end up with it. The proper response is: Duh! The real question is how many of those covered by ObamaCare were previously uninsured, how increased coverage is translating into more or better health care, and at what cost this comes both to public finances and personal liberties – all compared with what other alternatives? That is the stuff for serious debate.”

The number of 16.4 million more with insurance could be easily challenged – the administration numbers have never held up to scrutiny in the past – but more important is determining if this has accomplished meaningful reform. If people have insurance but do not have better healthcare, what has been accomplished?

The government’s own estimates indicate that over 70 percent of the newly insured are on Medicaid – a failed healthcare system by every measure. Readers of this blog are by now familiar with the alarming statistics of Medicaid, but for those who are not, here are a few reminders:

  • According to the journal Cancer, Medicaid patients and people lacking any health insurance were both 50% more likely to die when compared with privately insured patients.
  • A study published in the Annals of Surgery found that being on Medicaid was associated with the longest length of hospital stay, the highest total hospital costs, and the highest risk of death.
  • A study published in the American Journal of Cardiology found that Medicaid patients were more than twice as likely to have a major subsequent heart attack after angioplasty, compared with patients who had no health insurance at all.
  • A University of Virginia study found that individuals enrolled in Medicaid are almost twice as likely to die after surgery as privately insured patients, and about one-eighth more likely to die than the uninsured.
  • An Oregon study in 2008 found that Medicaid patients were 40% more likely to use the E.R. than the uninsured. (Because they can’t get doctor appointments.)

 

So ObamaCare has “successfully” enrolled millions of Americans (about 11.5 million using the HHS numbers) in a system that will deliver them poorer healthcare than if they had no insurance at all! This is what passes for accomplishment in the minds of ObamaCare defenders!

But perhaps people overall are receiving better healthcare than they were before ObamaCare. Actually, they aren’t. John Graham of The National Center for Policy Analysis compared the latest estimates from the Centers for Disease Control and Prevention (CDC) with their survey from a decade ago. He summarizes this comparison:

“The proportion of people of all ages with a “usual place to go for medical care” was 87.8 percent last year, the same as it was in 2002-2003. Further, 5.7 percent reported that they failed to obtain needed medical care due to cost last year, the same as it was in 2003-2004.”

(For more on this see my earlier post, One Year Later – Is ObamaCare Making a Difference?)

 

Lower Healthcare Expenditures

The second trumpeted “accomplishment” of ObamaCare defenders is lowered healthcare expenditures. President Obama said, “Cost growth is at a historic low. Deficits have been slashed.” Liberal defenders in the press such as Ruth Marcus of The Washington Post writes that healthcare costs “have been rising at their lowest levels in years” and that “slower growth in health spending has saved the government money.”

This is certainly good news but the implied connection with ObamaCare cannot be defended. Healthcare costs have been declining since 2003, well before ObamaCare was passed in 2010.

National Healthcare Spending

Fig. 1 – Annual Growth Rates for National Healthcare Spending – 2002 – 2013. Source: Center for Medicare and Medicaid Services – CMS.gov

 

Two important changes took place in 2003. The opportunity to have an HSA plan was created by legislation in Congress in 2003. Participation in HSAs has grown steadily since that time. Today, nearly 30 million Americans are covered by these consumer-driven health plans.

Enrollment in consumer-driven health plans now exceeds enrollment in HMOs. According to the Kaiser Family Foundation survey, one-fifth of all workers are now enrolled in these plans, up from 8% in 2008. As these individual accounts have grown, national health spending growth has slowed.

The other change that took place was the passage of the Medicare Modernization Act of 2003. This change in Medicare by President George W. Bush created Medicare Advantage plans and Medicare Part D, a new prescription-drug benefit for seniors.

Reihan Salam, writing in National Review, says this lowered health care costs because of the popularity of the Medicare Advantage Plans (MA). Unlike regular Medicare, called Medicare FFS, in which the federal government reimburses healthcare providers for each service rendered, Medicare Advantage is administered by private insurance companies and health-care organizations. They receive a fixed payment from the federal government for each patient.

ObamaCare actually calls for a reduction in these plans and has cut reimbursement rates to the insurance companies. Many expected this to reduce the popularity of these plans but enrollment is actually growing. Facing reduced payments, MA plans have had to cut costs, including narrowing the provider networks (reducing the number of physicians available on the network). These adjustments have allowed them to offer lower monthly premiums. As of 2013, 28 percent of Medicare beneficiaries were enrolled in these plans. There seems to be a growing number of seniors, especially those on fixed incomes, who choose these plans.

The second part of the Medicare Modernization Act of 2003 created Medicare Part D, a new prescription drug benefit for seniors. Because this plan incentivizes the use of generic drugs that lower costs, the plan has contributed to lower overall healthcare spending more than had been anticipated. Prescription-drug use reduces other health costs, especially hospitalization and therefore deserves much of the credit for the downward trend in healthcare spending.

Another reason for the decline in spending over the last decade is the willingness of employers to switch to high-deductible insurance plans. As employers try to cut their rising healthcare costs, they choose plans for their employees that pass more of the cost onto them. These high-deductible plans have built-in disincentives for their employees to seek medical attention except when really necessary. By passing along more of the up-front costs of healthcare, employers reduce overall healthcare spending.

Another factor contributing to the continued decline in annual healthcare spending is the recession. While the slowdown in healthcare spending began in 2003, when the economy was robust, the recession brought on by the collapse of the financial markets in 2008 brought further declines. The annual growth rate of spending was essentially flat from 2005 to 2007, declining only from 6.8 percent to 6.2 percent in three years. But with the 2008 recession, annual health care spending growth took a steeper decline to 4.7 percent. It has continued to decline since 2008 although leveling off at about 3.9 percent annually through 2013.

Even the left-leaning Kaiser Family Foundation analysis in 2013 concluded the slowdown in the growth of spending could be attributed to the economy. Here’s what they said:

“Based on statistical analysis of 50 years of health spending and economic trends, the study finds that the economy, including factors such as Gross Domestic Product growth and inflation, produces a major but delayed effect on the nation’s health spending. This effect stretches over a period of six years, meaning that the recession that ended in 2009 will continue to dampen health care spending for several more years and that spending will increase gradually as the economy strengthens.”

 

Five Years Later

March 23, 2015, marked the 5th anniversary of the passage of ObamaCare. Five years later there are still many questions that need to be asked. Has ObamaCare improved the healthcare of most Americans? Has ObamaCare proven affordable as its name implies? Is America better off now than we were before the passage of this deeply unpopular law?

The talking points of the left fail to satisfy with answers to these important questions. Let me know how you feel – Are you better off now with healthcare under ObamaCare than you were before?

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