Politics & Policy

Obamacare Costs Spark Voter Cynicism

Voters’ mistrust of government bean-counters is well founded.

Ask any pollster. Distrust of the government in Washington stands at unprecedentedly high levels. Between three-quarters (Pew) and four-fifths (Gallup) of Americans now instinctively question the veracity of promises from politicians and government agencies. Their frustration with all things governmental, in fact, has reached the boiling point. According to one recent poll by the Pew Research Center, “For the first time, a majority of the public [53 percent] says that the federal government threatens their personal rights and freedoms.”

Nowhere is this frustration and distrust more apparent than in the realm of health policy. Three years after the enactment of Obamacare, the level of skepticism about it remains high. Pollster Scott Rasmussen has found that, despite repeated assurances from the president and other Democrats, Americans remain convinced that Obamacare will make things worse. Voters believe the quality of their health care will deteriorate even as their costs continue to skyrocket. Federal budget deficits, moreover, will worsen. Revealingly, the level of their cynicism goes hand in hand with how much experience they have had with government promises — i.e., older voters are by far the most cynical.

The voters’ cynicism, however, is most rampant in their overwhelming sense that “the health care reform law will cost more than the official estimates.” Fully 73 percent of respondents overall, Rasmussen found, trust their own instincts over the official projections of government bean-counters, with three-quarters or more of men, seniors, whites, independents, and voters with annual incomes over $20,000 doubting the government. Even 58 percent of Democrats and 59 percent of liberals concur. The caucus of true believers in government is a small one.

The voters’ distrust is well founded. Nearly half a century ago, Congress established the two programs that lie at the heart of today’s fiscal crunch: Medicare and Medicaid. The bean-counters assured lawmakers that these brand new entitlements were affordable. By 1990, they predicted, Medicare’s hospital benefits would cost taxpayers “only” $9 billion. The actual cost was a cool $67 billion.

The most egregiously wrong prediction came two decades after the programs were launched. It had to do with the portion of the Medicaid program that sends cash to hospitals that treat large numbers of low-income and uninsured patients. In 1987, congressional budget experts assured lawmakers that the cost of this health-care entitlement five years hence would be less than $1 billion. The actual cost, thanks to accounting shenanigans by hospitals and complicit state governments, was an astounding $17 billion.

Sadly, underestimating the real costs of government-run health-care programs is the norm. This has been true for Medicare costs relating to kidney dialysis, coverage for catastrophic illness, home health care, the State Children’s Health Insurance Program, and, more recently, the subsidy for nursing-home costs included in Obamacare (known as the CLASS Act). Obama administration officials quickly shelved this latest entitlement upon learning that costs would so exceed projections as to be unsustainable, and it was recently repealed. The exceptions to the rule that costs of government-run health care will always outrun predictions are programs where the patients control the dollars spent on their care, such as the federal-employee health-insurance system, Medicare Part D (prescription-drug coverage), and consumer-directed and flexible spending accounts.

Where will the next huge cost overruns arise? From Obamacare’s expansion of Medicaid, which is scheduled to add 17 million Americans to the 70 million currently enrolled in this beleaguered program. Governors and state lawmakers are now assessing whether they should succumb to the siren song of  federal subsidies.  

But this would be a foolish decision. Today’s Medicaid patient already encounters enormous obstacles just getting in to see a physician, with worse health outcomes as a result. One 2009 survey of more than 1,100 physician practice groups nationwide found that over two-thirds of Medicaid patients seeking physical exams or in need of routine cardiology or gynecological care were turned away in cities such as Philadelphia, San Diego, Miami, New York, and Dallas. Fewer than one in ten of the physician practices surveyed in Philadelphia and Dallas, for example, would accept Medicaid patients looking for a heart checkup.

These findings are nothing new. As far back as 1993, peer-reviewed studies documented that Medicaid patients incurred worse health outcomes in areas as diverse as childhood asthma; breast, cervix, colon, and lung cancers; myocardial infarctions; strokes; and pneumonia than do comparable patients with private insurance. Asked to explain why they refuse to see Medicaid patients, physicians pointed to the impenetrable government paperwork and bureaucratic obstacles they encounter as well as to Medicaid’s notoriously low reimbursement rates.

Medicaid’s crisis, moreover, has spread to the entire health sector. A 2012 national survey of nearly 14,000 physicians identified a “silent exodus of physicians from the workforce” driven by “significant changes to the medical practice environment,” including physicians’ frustration with the recent round of health reforms. “Physicians,” the researchers found, “are working fewer hours, seeing fewer patients and limiting access to their practices.” Within four years, the equivalent of over 44,000 physicians will leave the workforce, and more than half will “cut back on patients seen, work part-time, switch to concierge medicine, retire, or take other steps likely to reduce patient access.”

Governors and state lawmakers beware: This “silent exodus” of physicians comes at precisely the time when Obamacare will be asking states to add fuel to Medicaid’s raging fire. And the temptation to embark on this fiscally foolhardy path will be great. Obamacare’s architects are offering a generous — but temporary — 100 percent federal payment to cover the cost of the expansion, as well as federal coverage of a temporary increase in the fees primary-care doctors receive for seeing Medicaid patients. But, like the cherry blossoms that ring the Tidal Basin, these payments will quickly wither away, leaving it to the states — suffering from the fiscal straitjacket Medicaid already puts on their budgets — to assume the burgeoning costs of Obamacare’s Medicaid expansion.

Far better to embrace Medicaid reforms that put patients first.

— Michael G. Franc is vice president of government studies for the Heritage Foundation.


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