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The Agenda

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

Today’s Policy Agenda: Hospitals Are Doing Pretty Nicely by Obamacare



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Hospitals are seeing profits increase under Obamacare.

Some hospitals are making millions from new Obamacare patients. Christopher Weaver from the Wall Street Journal reports:

Universal Health Services Inc.’s revenue rose 10% for the second quarter compared with a year earlier. LifePoint Hospitals Inc.’s profit rose to $39.1 million for the quarter, a 44% increase compared with last year’s quarter. . . .  About half of the eight million people who obtained coverage in health-law marketplaces between October and mid-April arrived in the final six weeks of the extended enrollment period. “

LifePoint, a Tennessee-based hospital chain, estimate that Obamacare enrollees used about $13 million worth of services during the last quarter, which is over double the anticipated amount — their profits also rose by 44 percent. LifePoint reports a 2 percent increase in patient volume overall, and higher rates of severe medical conditions and emergency-room visits.

Obamacare supporters can celebrate this as more evidence that the law is increasing access — and they could be right (about increasing access). But at what cost? A few weeks ago, I wrote about how doctor visits don’t seem to be increasing under the health law, and these reports add to evidence that patients are continuing to get care in emergency rooms (the most expensive setting by a long shot) instead of doctor’s offices. If that’s happening at a substantial rate, for whatever reason, Obamacare isn’t working as we’d have liked.

Did the long-term unemployed finally catch a break? We really don’t know.

At Wonkblog, Matt O’Brien breaks down unemployment numbers since the beginning of this year, and reports that 88 percent of the total decline in unemployment during the past six months is due to a decline in the long-term unemployment rate (those jobless for 27 weeks or more). If they’re getting jobs, this would be a great development, since long-term unemployment is both a serious financial and personal affliction, and a situation from which it’s very hard to get back into the ranks of the employed. 

But you can exit the ranks of the unemployed by getting a job or by leaving the labor force altogether. Which one is happening for the long-term unemployed? What happened to these people since the beginning of this year is of special interest since unemployment benefits for a substantial share of them abruptly ended on December 31, when Congress didn’t extend long-term unemployment benefits as it had for the entire recession, so we might find something out about how that program affects incentives and economic outcomes.

There’s some reason for pessimism: Monthly numbers indicate that rate at which the long-term unemployed are finding jobs is still similar to the rate at which they did throughout the recession. But O’Brien points out that shifts between the group of long-term unemployed one month and those who have jobs the next month aren’t that reliable because the long-term unemployed are kind of exceptional: They’re so tenuously attached to the labor force that some months, they don’t look for a job at all, so they have technically dropped out of the labor force. But they might look for a job the next month and get one — that wouldn’t count, in terms of monthly numbers, as a successful transition out of long-term unemployment.

To address that issue, a couple Fed economists examined whether people who were among the long-term unemployed one year ago have found a job by now — and it turns out that lots of them have, and that they’re finding jobs at a slightly higher rate than earlier cohorts of the long-term unemployed had. The likelihood of their having found a job is also slightly higher than the likelihood that they’ve dropped out of the labor force:

Why might this be? We could be seeing improvements because more people may be more willing to search for and take jobs since unemployment benefits ended, as some Republicans have suggested. But evidence also indicates that decreases in the short-term unemployment rate are correlated with higher job-finding rates for the long-term unemployed — and the short-term unemployment rate has been dropping.

The president extended federal health benefits to seasonal workers today, without asking Congress.

The president plans to enact two new rules giving temporary and seasonal government workers access to the same health care that most other federal employees get, a set of insurance options called the Federal Employees Health Benefits Program. As Pete Kasperowicz from the Blaze points out, the new rules seem to contradict existing law and lack congressional approval:

The rule from the Office of Personnel Management would let these federal workers sign up for coverage under the Federal Employees Health Benefits Program, and also allow some of them to enjoy a government contribution to their insurance premiums. Both steps would be done through OPM’s proposed regulation, and not through an act of Congress. . . . But the change would appear to go against a 1978 law that, according to the Congressional Research Service, does not make temporary or intermittent workers eligible for the FEHB program.

Most persons who work full time (30 hours a week) for at least 90 days will be eligible to sign up for heavily subsidized health care under the FEHB — as far as employer-provided health care, and certainly health care in general, goes, it’s a very good deal. The OPM report says that the rules will cost about $100 million, but the cost could be much greater — this number is based on their prediction that only 10 to 20 percent of newly eligible persons will sign up for care.

Will it be money well spent? Maybe, maybe not. Intuitively, providing consistent, year-round coverage to seasonal workers is bound to result in some health improvements, but to my knowledge, there isn’t data to suggest this is so. In fact, the OPM proposal says there is no evidence of what public-health effects the new rules may produce. Spending even $100 million a year to enact a potentially ineffective executive order probably just isn’t good public policy.



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