The Corner

Economy & Business

Hillary Clinton Wants to Build on Obamacare’s Failure

There is a lot to say about the Democratic debate, including that it is stunning how little new ideas they have and when the candidates do, how bad they are.

However, I would like to focus on Hillary Clinton’s comments about how we have accomplished so much on the health care reform front and how she wants to build on Obamacare. She said:

But here’s what I believe, the Democratic Party and the United States worked since Harry Truman to get the Affordable Care Act passed.

We finally have a path to universal health care. We have accomplished so much already. I do not to want see the Republicans repeal it, and I don’t to want see us start over again with a contentious debate. I want us to defend and build on the Affordable Care Act and improve it.

Hum . . . so let’s review how much we have accomplished with Obamacare:

First, Obamacare isn’t about health care, it is about health insurance; not the same thing at all. Also Obamacare didn’t reform the health care system. It just threw trillions of dollars at an already dysfunctional system and implemented many new taxes without even managing to pay for all the new spending. Imagine the damage to the economy. 

Second, Obamacare led 5 million people to lose their plans in 2013. Remember that? Many more have lost their plans since then.

Third, the average advance premium tax credit is up 12 percent from last year.

Fourth, the Congressional Budget Office projects that the ACA will reduce work by an amount equal to about two million full-time jobs and will lower the nation’s economic output by about half of one percent. Also, as my colleague Brian Blaise notes recently:

In Mercatus research in 2014, University of Chicago economist Casey Mulligan estimated negative effects roughly twice as large [as the CBO projects]. The reduced jobs and economic growth are largely the result of the structure of the ACA’s subsidies. Since the ACA’s subsidies decline sharply as people’s incomes increase, many people, particularly lower-wage workers, are confronted with a disincentive to work more and earn additional income. In part, the negative economic effect is also attributable to the law’s taxes, including the employer mandate, which takes full effect this year and which raises the cost of workers, particularly lower-wage workers.

Fifth, a new study by Harvard and Stanford Universities finds that the dependent care mandate, a very popular feature of Obamacare, will have very unpopular consequences: It lowers wages for workers at firms with employer-based coverage by $1200 every year. You can, however, expact that Democrats like Clinton will very soon blame the reduction on greedy employers and try to fix the problems with more mandates.

Sixth, 2016 enrollment will likely be at least ten million people below expectations when the ACA was passed. Also, the nature of enrollment will likely have nasty consequences for our budget. The data show that people with at least middle class income are still largely shunning exchanges, enrollees are still skewing older and sicker.

Also, thanks to Obamacare about 13 million more people are enrolled in Medicaid in 2015 than were enrolled in 2013.  That Democrats would be proud of throwing more people into Medicaid has never made any sense to me. The best that can be said about Medicaid is that it give poor people something they didn’t have before. However, it is hardly the best way to give the poorest in America better health outcomes. First, the empirical evidence shows that, Medicaid often provides second-class care. Poor access and poor health outcomes are often the fate that awaits Medicaid beneficiaries, including the need for greater reliance on emergency rooms and higher mortality rates. 

As American Enterprise Institute scholar and practicing physician Dr. Scott Gottlieb points out

There’s now a voluminous body of clinical literature showing that access to Medicaid alone doesn’t improve (and can worsen) medical outcomes. Boosters of Medicaid dismiss much of this literature, arguing that the research can’t control for all the socioeconomic factors that contribute to bad medical outcomes among the poor. But the sheer volume of literature is becoming hard to ignore.

And then there is this new paper from economists at MIT, Harvard and Dartmouth that found that Medicaid recipients only benefit by 20 to 40 cents for each dollar of Medicaid spending. Wow. If you want to learn more about this paper, read this excellent piece by Megan McArdle at Bloomberg View.  

Finally, we can’t ignore that the exchanges face an uncertain future as the largest insurer in the country, UnitedHealth, indicated it was a mistake to participate and that it may withdraw in 2017. One reason that United and other insurers report is that people appear to be gaming the new system – signing up when they need care and then dropping it. ​To make matters worse, I am sure these insurers are hoping that the government will throw more bones their ways in exchange for them staying in the exchange. I am also sure that the government will be happy to indulge. However, it will only delay the inevitable. 

To conclude, when Clinton said on Sunday night that the Affordable Care Act “is one of the greatest accomplishments of President Obama, of the Democratic Party, and of our country,” she is effectively acknowledging how awful the last seven years have been. Unfortunately, that came after eight not-so-great Bush years. It explains why only 25 percent say we are heading in the right direction while 65 percent say we are on the wrong track. And more than half of Americans actually say they dislike the president. 

This post is not an endorsement of Bernie Sanders’s Medicare-for-all idea!


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