Never one to let anything speak for itself, the president made his case for the Affordable Care Act on Tuesday, the day its exchanges launched. To listen to his speech, the health-care law has fixed the U.S. economy, will save tens of thousands of lives, and has solved the U.S.’s long-term debt problem. Needless to say, none of these things are true.
He began with a sort of Clintonian random factoid he said he’d heard the other day: that people who get cancer and have health insurance are 70 percent more likely to be alive after five years than people who get cancer and don’t have health insurance. I have no idea if this is true or not, statistically, because I couldn’t find the study — but (1) there are plenty of lurking variables here (people who have health insurance are more likely to survive it because they’re probably wealthier, have healthier habits, etc., and it’s impossible to control completely for all of this), and (2) if you get cancer, you’re significantly more likely to live another five years if you live in the U.S. than you are in any other wealthy country (health-care wonks argue that survival rates aren’t useful statistics here in the first place, but he said it).
Then the president made a rather more dramatic claim, dispensing with statistical nuance altogether: “This is life-or-death stuff. Tens of thousands of Americans die each year just because they don’t have health insurance.” This isn’t true in the way most people would understand it: Obviously, tens of thousands of Americans do not die in ditches or outside the doors of hospitals because they lack insurance that will save their lives. But the claim isn’t entirely without a statistical basis: A 2009 study by Harvard Medical School found what a number of other studies had argued over the years, that uninsured people, adjusted for a wide range of factors, have higher death rates than people with insurance (its result was much stronger than those of other studies, though). Taking its finding that mortality rates for the uninsured are 40 percent higher than the insured, the authors calculate that in 2005 there were “approximately 44,789 deaths among Americans . . . associated with lack of health insurance.” (Note: Extrapolating the HMS numbers to the CBO’s predicted rates of insurance coverage after Obamacare is fully implemented at the cost of $200 billion a year, tens of thousands of Americans will still be dying for lack of insurance coverage.)
Even to the extent that lack of health insurance does cause deaths, we should consider whether the policy being proposed is the best “treatment” to affect the bad variable (mortality) and the best way to apply that treatment. It’s not clear the health-care law is well designed to reduce mortality. For one thing, while the exchanges will hopefully provide reasonably good insurance, a good bit of Obamacare’s expansion in coverage (one third, according to the CBO, but that might change a lot) comes via the Medicaid expansion — and the best assessment of Medicaid that’s been done, a randomized control trial in Oregon, found no evidence that it improves physical-health outcomes. It did find, though, that people were better off mentally, because they had less financial stress — so I suppose the president is partially right when he boasts that we’re “free[ing] millions of our fellow Americans from [the] fear” “that they’ll go broke if they get sick.”
But whether we’re freeing them from that problem rather than just the fear of it is also a matter of real debate: Will expanding insurance coverage, as the ACA does, make medical bankruptcy a thing of the past?
Not necessarily. There are a number of provisions that will, of course, make more Americans more financially secure: no more lifetime limits on an insurance plan’s payments, subsidies to people who couldn’t afford insurance but want it, etc. But there are also countervailing factors: People will be buying a health-care plan that’s going to cost them a lot of money, and it won’t necessarily protect them from bankruptcy if those costs spiral out of control. Inasmuch as health-care bankruptcies can be accurately measured, Massachusetts, a state with high levels of health-insurance coverage, has plenty of them; and the implementation of a plan similar to Obamacare in 2005 doesn’t seem to have lowered them. Health-care problems cause all kinds of financial stress that’s not affected by insurance coverage, so medical bankruptcies happen even in social democracies with single-payer health-care systems. It’s possible that the ACA will, overall, reduce the rate of medical bankruptcy, but it will be very far from eliminating the problem, as the president suggests.
The president then cited a few other provisions — the ability of young adults to stay on their parents’ plans, rebates paid by insurance companies deemed to be spending an insufficient amount of revenues on paying claims costs — and argued that already “this law means more choice, more competition, lower costs for millions of Americans.”
Obviously, the law will mean lower insurance premiums for some Americans, mostly because of large subsidies, and many others couldn’t afford insurance before or couldn’t buy it because of a pre-existing condition: Voilà, choice. But simultaneously, it means higher costs for young and healthy people in most states and less choice for Americans who are losing access to their existing small-group and individual plans and now can purchase only ACA-compliant plans (there will be “more competition” in the individual-insurance market — to the extent that these artificially created markets will feature real competition). Choice is a strange virtue to attribute to the health-care law, since the main defense of its higher premium costs is that it shields people from choosing to buy “lower-quality” health insurance (that is, cheap plans that don’t cover a certain range of services and a certain level of expected health-care costs). And this supposedly benevolent restriction of choice has real downsides for everyone, by limiting the potential for health-care innovation.
The president’s next claim:
This law doesn’t just mean economic security for our families. It means we’re finally addressing the biggest drivers of our long-term deficits. . . . Costs haven’t skyrocketed; they’re growing at the slowest rate in 50 years. The last three years since I signed the Affordable Care Act into law are the three slowest rates of health spending growth on record.
Health-care costs have indeed been growing slowly of late — probably in part due to the poor economy, which depresses spending of all kinds, and in part due to increased cost sharing, as employers force their employees to pay more health costs out of pocket (a development the ACA does some things to encourage and much to discourage). But national health-care spending is about to accelerate again, and it’s still on course to blow up the federal budget. Why? To start, as the federal government’s own actuaries write, “In 2014 the implementation of provisions of the Affordable Care Act related to major coverage expansions is expected to accelerate health spending growth to 6.1 percent.”
The president is right to identify the “biggest drivers of our long-term deficits”: government’s health-care obligations, and the price of that coverage, which is expected to rise very rapidly. The ACA will substantially expand coverage, increasing the government’s health-care liabilities. Meanwhile, the law’s most passionate proponents think the law has done a little about the second problem (medical inflation) for now, but federal actuaries predict it will worsen the problem slightly in the future. In other words, according to existing predictions of our long-term deficits, Obamacare has made us lose ground.
Last, the president argued that, contrary to Republican claims, this law hasn’t “‘destroyed’ our economy.” That term is surely a little hyperbolic, but the evidence Obama adduces against it — the jobs market over the past three and a half years — does little credit to his policies. It’s really hard to estimate the overall economic costs of the ACA, but its economic downsides — the disincentives to hiring and work, the increases in taxes — are very real, however much the president likes to laugh them off.
The president finished with one last misleading tidbit: “Just today, we learned that our manufacturers are growing at the fastest rate in two and a half years. They have factored in the Affordable Care Act. They don’t think it’s a problem.” Yes, the survey tracking U.S. manufacturing activity jumped this week — to 56.2, lower than it was for most of 2010, and where 50 or below is shrinking. But overall manufacturing employment remains stagnant. During the president’s 2012 campaign, he promised a million new manufacturing jobs by 2016; despite the shale boom, his targets have been missed spectacularly. Maybe he didn’t factor in the Affordable Care Act.
— Patrick Brennan is an associate editor at National Review.