The Three Failed Promises of ObamaCare
by Tevi Troy
The third promise was that if you like your health-care plan, you can keep it. During his year of salesmanship, President Obama mentioned it nearly every time he spoke about the act, often stating it more than once in the same setting. The exact wording of the comment varied over time, but the political strategy behind the statement was clear: If you were among the 85 percent or so of Americans who already had insurance, ObamaCare would have its impact on other people, not on you.
The early indicators are not encouraging. One CBO analysis has estimated that ObamaCare will cause approximately 7 million people currently covered to lose employer-sponsored coverage. On top of that, millions of Americans who purchase insurance via the individual market are already receiving letters notifying them that their coverage is being terminated. In response to this development, the Washington Post’s Fact Checker reexamined President Obama’s promise that if you like your health-care plan you can keep it and found it wanting, granting the claim a whopping “4 Pinocchios,” the worst possible rating. In addition to these changes in the individual market, employers across the nation are taking the rational step of looking at their health-care offerings and reassessing whether what they do is acceptable under the new law and whether it is worth their while to continue to provide health-care coverage to employees. They can instead drop coverage and pay a penalty (which will be cheaper than the cost of providing health care) when that penalty goes into effect in 2015. Those workers could then join the exchange system, pay a higher premium cost, and apply for subsidies to lower the cost.
Again, it is too soon to say what the full effects will be, but it is not too early to suggest that the promise that everyone could keep their insurance was at best irresponsible and at worst deliberately deceitful. It was obviously misleading with respect to the individual market. Furthermore, it failed to take into account the fact that people (and companies) respond to economic incentives and that such a rushed and vast health-care law would lead employers to a wholesale reassessment of their existing practices.
So far, these three promises appear empty, false, or impossible to fulfill.
This analysis has looked at ObamaCare solely on its proponents’ terms. When we begin to look at other real-world effects, the picture gets even worse. First, the law raises taxes by $1.1 trillion, which in itself has long-range economic effects. Additionally, there is the impact on the job market. Many smaller employers are looking at the elements of the employer mandate and are trying to configure their workforces so that they do not go over the 50 workers or 30-hour thresholds governing when they would be subject to that mandate. These known effects on employers remain an important reason why hiring is still sluggish, and why ObamaCare will probably limit full-time hiring for the foreseeable future. As restaurant CEO Andrew Puzder wrote in the Wall Street Journal, “the evidence that ObamaCare is having a negative impact on hiring is unequivocal, abundant, and consistent with common sense.”
There is also the matter of the law’s impact on health-employment itself. Health care is an important job sector in the U.S., and it has also been one of the few sectors that has continued to grow in the past five years. And yet in September, just before ObamaCare went “live,” there were more layoffs among health-care providers than in any other industry. Hospital layoffs were the biggest driver of this disconcerting figure, as hospitals girded for readjustments of their reimbursement levels from ObamaCare, as well as rules designed to generate fewer hospital stays. ObamaCare will also drive changes among this nation’s 850,000-plus physicians. Faced with the prospect of lower reimbursement, greater paperwork burdens, and more oversight in how they practice medicine, many doctors are already leaving smaller entrepreneurial practices for larger hospital groups; in the future, others will choose to retire early while prospective doctors will eschew medical school altogether, exacerbating an already-worrisome expected doctor shortage.
ObamaCare will not only change how many employers approach hiring; it will also reduce incentives to work. Thanks in part to ObamaCare, the percent of pay and other compensation that full-time workers with median incomes will bring home will fall below 50 percent beginning in 2015. As Ronald Reagan long argued, if workers cannot keep the fruits of their labor, they will have less incentive to engage in that labor.
Finally, the law will limit choices and the ability to move our health-care system in a more consumer-driven way. One of the best ways to improve quality and reduce costs is the ability to let markets work, encourage providers to tailor service to patients, and empower consumers to act in economically rational ways to find the deals that are best for them. Unfortunately, our system has long been dominated and distorted by third-party payment systems, both public and private. For the past five decades, this has reduced the power of individuals to act in market-oriented ways. ObamaCare will only exacerbate this unfortunate trend. Since the development of Medicare and Medicaid in 1965, the percentage of spending on out-of-pocket costs has declined precipitously, while the cost of health care has been spiraling upward. ObamaCare will accelerate the movement toward third-party payment by limiting Health Savings Accounts and Flexible Spending Accounts and by imposing insurance mandates that will make it harder if not impossible to purchase a bare-bones, high-deductible plan that incentivizes individuals to control spending habits by spending their own money on health care.
These long-term health-care developments are already taking shape during the ObamaCare implementation period. It is in this period that the views on ObamaCare will be shaped and begin to set in what constitutes the collective American mind.
Critics of the law should not take too much solace from the law’s many opening glitches. Such an approach can be all too easily turned back by competent computer programmers. A better argument is that bloated and inefficient government lacks the capacity to accomplish what its proponents claim it can do. Opponents of ObamaCare need to make the case based on how much ObamaCare costs those who are trying to get care, how it limits their choices, and how it drives up deficits. Otherwise, Democrats will trump their arguments by highlighting every individual who got a check. And history has shown that check distribution can be a very powerful argument.
http://www.commentarymagazine.com/article/the-three-failed-promises-of-obamacare/
The early indicators are not encouraging. One CBO analysis has estimated that ObamaCare will cause approximately 7 million people currently covered to lose employer-sponsored coverage. On top of that, millions of Americans who purchase insurance via the individual market are already receiving letters notifying them that their coverage is being terminated. In response to this development, the Washington Post’s Fact Checker reexamined President Obama’s promise that if you like your health-care plan you can keep it and found it wanting, granting the claim a whopping “4 Pinocchios,” the worst possible rating. In addition to these changes in the individual market, employers across the nation are taking the rational step of looking at their health-care offerings and reassessing whether what they do is acceptable under the new law and whether it is worth their while to continue to provide health-care coverage to employees. They can instead drop coverage and pay a penalty (which will be cheaper than the cost of providing health care) when that penalty goes into effect in 2015. Those workers could then join the exchange system, pay a higher premium cost, and apply for subsidies to lower the cost.
Again, it is too soon to say what the full effects will be, but it is not too early to suggest that the promise that everyone could keep their insurance was at best irresponsible and at worst deliberately deceitful. It was obviously misleading with respect to the individual market. Furthermore, it failed to take into account the fact that people (and companies) respond to economic incentives and that such a rushed and vast health-care law would lead employers to a wholesale reassessment of their existing practices.
So far, these three promises appear empty, false, or impossible to fulfill.
This analysis has looked at ObamaCare solely on its proponents’ terms. When we begin to look at other real-world effects, the picture gets even worse. First, the law raises taxes by $1.1 trillion, which in itself has long-range economic effects. Additionally, there is the impact on the job market. Many smaller employers are looking at the elements of the employer mandate and are trying to configure their workforces so that they do not go over the 50 workers or 30-hour thresholds governing when they would be subject to that mandate. These known effects on employers remain an important reason why hiring is still sluggish, and why ObamaCare will probably limit full-time hiring for the foreseeable future. As restaurant CEO Andrew Puzder wrote in the Wall Street Journal, “the evidence that ObamaCare is having a negative impact on hiring is unequivocal, abundant, and consistent with common sense.”
There is also the matter of the law’s impact on health-employment itself. Health care is an important job sector in the U.S., and it has also been one of the few sectors that has continued to grow in the past five years. And yet in September, just before ObamaCare went “live,” there were more layoffs among health-care providers than in any other industry. Hospital layoffs were the biggest driver of this disconcerting figure, as hospitals girded for readjustments of their reimbursement levels from ObamaCare, as well as rules designed to generate fewer hospital stays. ObamaCare will also drive changes among this nation’s 850,000-plus physicians. Faced with the prospect of lower reimbursement, greater paperwork burdens, and more oversight in how they practice medicine, many doctors are already leaving smaller entrepreneurial practices for larger hospital groups; in the future, others will choose to retire early while prospective doctors will eschew medical school altogether, exacerbating an already-worrisome expected doctor shortage.
ObamaCare will not only change how many employers approach hiring; it will also reduce incentives to work. Thanks in part to ObamaCare, the percent of pay and other compensation that full-time workers with median incomes will bring home will fall below 50 percent beginning in 2015. As Ronald Reagan long argued, if workers cannot keep the fruits of their labor, they will have less incentive to engage in that labor.
Finally, the law will limit choices and the ability to move our health-care system in a more consumer-driven way. One of the best ways to improve quality and reduce costs is the ability to let markets work, encourage providers to tailor service to patients, and empower consumers to act in economically rational ways to find the deals that are best for them. Unfortunately, our system has long been dominated and distorted by third-party payment systems, both public and private. For the past five decades, this has reduced the power of individuals to act in market-oriented ways. ObamaCare will only exacerbate this unfortunate trend. Since the development of Medicare and Medicaid in 1965, the percentage of spending on out-of-pocket costs has declined precipitously, while the cost of health care has been spiraling upward. ObamaCare will accelerate the movement toward third-party payment by limiting Health Savings Accounts and Flexible Spending Accounts and by imposing insurance mandates that will make it harder if not impossible to purchase a bare-bones, high-deductible plan that incentivizes individuals to control spending habits by spending their own money on health care.
These long-term health-care developments are already taking shape during the ObamaCare implementation period. It is in this period that the views on ObamaCare will be shaped and begin to set in what constitutes the collective American mind.
Critics of the law should not take too much solace from the law’s many opening glitches. Such an approach can be all too easily turned back by competent computer programmers. A better argument is that bloated and inefficient government lacks the capacity to accomplish what its proponents claim it can do. Opponents of ObamaCare need to make the case based on how much ObamaCare costs those who are trying to get care, how it limits their choices, and how it drives up deficits. Otherwise, Democrats will trump their arguments by highlighting every individual who got a check. And history has shown that check distribution can be a very powerful argument.
About the Author
Tevi Troy, a former deputy secretary of health and human services, is a frequent contributor to Commentary. His latest book is What Jefferson Read, Ike Watched, and Obama Tweeted: 200 Years of Popular Culture in the White House.http://www.commentarymagazine.com/article/the-three-failed-promises-of-obamacare/
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