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On Obamacare, the President ignores unpleasant realities
James C. Capretta. Excerpt:
"But much of the increase in insurance enrollment under the ACA is due to
an expansion of public coverage, not private insurance. The CBO
estimates that, in 2016, more than half of the people gaining insurance
will be enrolled in Medicaid, a program that scores of studies have
shown provides access to care that is far more restricted
than that provided by private insurance. Yes, there are millions of new
enrollees in Medicaid. But the ACA did nothing to improve the quality
of the care Medicaid provides to low-income patients.
Also, the president all but ignores the increasing instability of the
ACA’s exchanges. McKinsey reported that in 2014 the cumulative losses for the health-insurance industry
in the individual insurance market, which is now dominated by the ACA
exchanges, was $2.7 billion. Since then, things have only gotten worse.
Scores of insurers have reported significant losses since the program
launched, and many have pulled out of various markets. So far, 16 of the
23 publicly subsidized co-op plans — precursors to a “public option” — have gone bust from large financial losses. And the insurers who are planning to stay in the exchanges in 2017 are asking for very substantial premium increases, often well above 20 percent, in order to stem their losses.
The basic problem is that those buying insurance plans on the
exchanges have been higher users of health services than the insurers
priced for. Why did insurers underprice their products? The official
answer is that they expected more young and healthy customers to enroll.
But there was never really any reason to expect the risk pool in the
exchanges to resemble what large employers experience. In fact, given
the ACA’s requirement that insurers charge all customers the same
premium (with restricted adjustments for age), it was to be expected
that enrollees in exchange plans would have more health problems and
also use services at a high rate. What really happened is that insurers
succumbed to the explicit and implicit pressure coming from the Obama
administration to lowball the premiums they were charging to make the
program look more affordable than it really was in its early years.
That kind of wishful thinking can go on for only so long, and now it is ending.
On
cost growth, the president engages in the usual post hoc fallacy. He
says that recently costs have been growing less rapidly than in the past
and that therefore the cause must be the enactment of the ACA in 2010
and, specifically, efforts to promote “delivery system reforms” through
Medicare. This is nonsense. The savings from accountable care
organizations, bundled payments, and other similar changes enacted in
the ACA have been estimated by the CBO and others to be very small
relative to the size of the Medicare program and national health
spending. Most of the slowdown of recent years was due to the deep
recession of 2007–09 and the slow recovery that followed. It is also
noteworthy that there has been a slowdown in health spending throughout the developed world
in recent years. Administration officials like to attribute every
positive trend they can find to the ACA, but even they might find it
hard to come up with a plausible explanation for why Obamacare led to a
slowdown in health expenditures in Europe."
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