Today’s Policy Update: Are Obamacare Enrollees Not Going to the Doctor?

by Callie Gable

High corporate tax rates are driving American health-care companies abroad, according to a report recently released by the Congressional Research Service (thanks to Jonathan Easley of Morning Consult for the pointer). Health-care mergers and acquisitions are rising globally, hitting an all-time high in 2014, with the year barely half over:

But, as the chart above notes and the CRS report found, this isn’t quite ordinary M&A activity: A lot of the deals are “tax inversions,” deals intended to move around corporate responsibility to avoid U.S. taxes and take advantage of low rates in countries like Ireland. Seven of eleven tax inversions being considered in 2014, according to the CRS, are health firms.

As Easley notes, health companies are under pressure to both maintain profit margins for investors and keep products affordable for customers. Once companies have exhausted other options for cutting costs in the manufacturing process, reducing taxes is one of the last ways to lower costs.

It’s probably only a matter of time before legislation or regulation makes these kinds of mergers illegal, and if they do, American consumers might well see see price increases for drugs, medical devices and supplies, and a number of other products from the health-care industry. Of course, as the CRS report notes, one way to fix this issue fundamentally would be to make the U.S. corporate-tax system more competitive.

Millions bought coverage in the exchanges, but they don’t seem to be going to the doctor much.

A new study from the Robert Wood Johnson Foundation on the impact of the Obamacare reports no overall increase in new patient visits to physicians in the first half of 2014:

More than 8 million people purchased insurance on the exchanges this year and the number of uninsured Americans does appear to have dropped noticeably – why haven’t new patient visits increased?

The authors of the study suggest that locating a physician and scheduling an appointment may be challenging for newly insured individuals, especially for those who purchased narrow-network plans. As a result, many newly insured individuals might continue to receive non-emergent care in emergency rooms. Another possible explanation is that most of the people on the exchanges were not in fact uninsured — we still don’t really know.

If either explanation is correct, the health exchanges hardly look like a success. If most enrollees aren’t newly insured or the newly insured enrollees are still using expensive emergency-room care (or both), then costs won’t decrease and access hasn’t been meaningfully improved. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.