Democrats gained the political muscle to push the Affordable Care Act (ACA) through Congress on three basic arguments.
First, they argued that the United States had too many uninsured people, with estimates ranging from 30 million to 45 million.
Second, the rise in costs for health care outstripped inflation, and the market required an intervention that would bend the cost curve downward.
Third, Democrats claimed that insurance companies made too much profit and shorted most consumers on care, while those with generous health plans – so-called “Cadillac plans” – drove up utilization rates and costs for everyone else.
The only solution for these ills was a massive government intervention, complete with mandates for all participants in the market, including providers, insurers, and consumers. Once government ran this market, Democrats promised, consumers would see their premiums decrease (by $2,500 a year, according to Barack Obama), insurers would gain access to vast numbers of new consumers who couldn’t get insurance before, and the lifting of cost burdens would spark a job-creation surge that would lift the economy.
Such were the promises of Obamacare five years ago. The reality began looking much different in the fall of 2013, when the first open-enrollment period turned into a disaster. Millions of insurance policies were canceled even though the health care exchanges failed to work properly.
In 2014, premiums spiked, and then in 2015 they exploded again along with deductibles so high that many decided not to be insured at all. Over half of Obamacare’s co-ops collapsed this year, most of them this fall, and now the providers who took their clients may end up stuck with the bills.
“Health care providers could get stuck with unpaid bills in a half dozen states where co-op plans have collapsed,” reports Politico Pro’s Paul Demko. “That's because there's no financial backstop in those states if the failed nonprofit startups backed by Obamacare loans run out of money before paying off all of their medical claims.” The failure of the co-op Health Republic Insurance of New York left $165 million in unpaid bills, and a survey showed 64 percent of New York providers waiting for payment. Had a private-sector insurer defaulted in a similar manner, these providers would have been compensated from a guaranty fund set up by the industry.
Obamacare co-ops had no such backstop, and more than 600,000 Americans will have to find insurance that is more expensive or do without.
Still, as bad as the news has been over the past five years, the remaining illusions were shattered by the CBO and the White House itself this week. Obamacare didn’t make much of a dent in the uninsured rate, it has forced costs to rise faster than before, and it will kill millions of jobs that otherwise would be created.
“The labor force is projected to be about 2 million full-time-equivalent workers smaller in 2025 under the ACA than it would have been otherwise,” the CBO concludes in the latest analysis of Obamacare’s impact on the economy. Much of the reason — the CBO puts it at 75 percent — comes from the net increase of effective tax rates on labor, which will incentivize potential workers to stay out of the work force. Democrats claim that this is a feature rather than a bug, as people can choose not to work. However, even with that rose-colored glasses view, it means that the rest of the taxpayers will have to subsidize the health care of those who opt out, whether happily or unhappily.
The depressing impact on job growth is not the only illusion shattered, either. The Centers for Medicare and Medicaid (CMS) published a study on Obamacare’s impact on costs and on reducing the numbers of uninsured — and it fails on both counts. The CBO estimated after the passage of Obamacare that the number of uninsured would drop 19 million by 2014 from a 2010 benchmark. Instead, it has only dropped 12.6 million. As Avik Roy points out at Forbes , the 2010 level of uninsured was artificially high due to the impact of the Great Recession. Using 2008 as a benchmark, the number of uninsured has dropped by only 6.7 million.
“In other words,” Roy writes, “all of the disruption, spending, taxation, and premium hikes in Obamacare has only reduced the percentage of U.S. residents without health insurance by 2.7 percent, from 13.9 percent to 11.1 percent: a remarkably small reduction, and far lower than what the law was supposed to achieve.” Furthermore, with enrollment vastly underperforming expectations over the first three years of the system, there will be little room for further improvement.
Finally, the cost curve has indeed been bent, but upwards, and CMS chalks it up to Obamacare. Health care spending rose 5 percent in 2014, well above the rate of inflation, and the fastest it had grown since 2007. Medicaid spending rose 11 percent, thanks to Obamacare’s expansions, but Medicare also rose 5.5 percent and spending in private insurance plans rose 4.4 percent as well. “The return to faster growth,” CMS concluded in its report, “was largely influenced by the coverage expansions of the Affordable Care Act.”
Just wait until they start calculating costs for 2015 and 2016, with the premium spikes and consumers left exposed by escalating deductibles.
So let’s recap. Obamacare has depressed job growth, costs are escalating at a higher rate, barely a dent has been made in the numbers of uninsured, and insurers are either exiting the markets or failing altogether. Under any other circumstances, a program that failed on its promises so badly would have all sides moving quickly to repeal it and work on a replacement. Don’t bet on that outcome from this White House and its dwindling number of Democratic supporters on Capitol Hill. They will surely try to sell us the illusion of competence and success.
That doesn’t mean we have to buy it.