|ObamaCare: The President's Monumental Failure|
Obamacare, Two Years Later
It’s still a failure.
By Michael Tanner
March 21, 2012 4:00 A.M.
This week marks two years since of the passage of the Patient Protection and Affordable Care Act, and if the Obama administration has chosen to all but ignore the second anniversary of Obamacare, the rest of us should pause and reflect on just what a monumental failure of policy the health-care-reform law has been.
What’s more, it has been a failure on its own terms. After all, when health-care reform was passed, we were promised that it would do three things: 1) provide health-insurance coverage for all Americans; 2) reduce insurance costs for individuals, businesses, and government; and 3) increase the quality of health care and the value received for each dollar of health-care spending. At the same time, the president and the law’s supporters in Congress promised that the legislation would not increase the federal-budget deficit or unduly burden the economy. And it would do all these things while letting those of us who were happy with our current health insurance keep it unchanged. Two years in, we can see that none of these things is true.
For example, we now know that, contrary to claims made when the bill passed, the law will not come close to achieving universal coverage. In fact, as time goes by, it looks as if the bill will cover fewer and fewer people than advertised. According to a report from the Congressional Budget Office released last week, Obamacare will leave 27 million Americans uninsured by 2022. This represents an increase of 2–4 million uninsured over previous reports. Moreover, it should be noted that, of the 23 million Americans who will gain coverage under Obamacare, 17 million will not be covered by real insurance, but will simply be dumped into the Medicaid system, with all its problems of access and quality. Thus, only about 20 million Americans will receive actual insurance coverage under Obamacare. That’s certainly an improvement over the status quo, but it’s also a far cry from universal coverage — and not much bang for the buck, given Obamacare’s ever-rising cost.
At the same time, the legislation is a major failure when it comes to controlling costs. While we were once told that health-care reform would “bend the cost curve down,” we now know that Obamacare will actually increase U.S. health-care spending. This should come as no surprise: If you are going to provide more benefits to more people, it is going to cost you more money. The law contained few efforts to actually contain health-care costs, and the CBO now reports that many of the programs it did contain, such as disease management and care coordination, will not actually reduce costs. As the CBO noted, “in nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organization were considered.”
This failure to control costs means that the law will add significantly to the already-crushing burden of government spending, taxes, and debt. According to the CBO, Obamacare will cost $1.76 trillion by 2022. To be fair, some media outlets misreported this new estimate as a doubling of the law’s originally estimated cost of $940 billion. In reality, most of the increased cost estimate is the result, not of increased programmatic costs, but of an extra two years of implementation. Still, many observers warned at the time that the original $940 million estimate was misleading because it included only six years of actual expenditures, with the ten-year budget window. The new estimate is, therefore, a more accurate measure of how expensive this law will be. Yet even this estimate covers only eight years of implementation. And it leaves out more than $115 billion in important implementation costs, as well as costs of the so-called doc fix. It also double-counts Social Security taxes and Medicare savings. Some studies suggest a better estimate of Obamacare’s real ten-year cost could run as high as $2.7–3 trillion. And this does not even include the over $4.3 trillion in costs shifted to businesses, individuals, and state governments.
All this spending means that we will pay much more in debt and taxes. But we will also pay more in insurance premiums. Once upon a time, the president promised us that health-care reform would lower our insurance premiums by $2,500 per year. That claim has long since been abandoned. Insurance premiums are continuing to rise at record rates. And, while there are many factors driving premiums up, Obamacare itself is one of them. According to the Kaiser Family Foundation, insurance premiums had been rising at roughly 5 percent per year pre-Obamacare. That jumped to 9 percent last year. And roughly half that four-percentage-point increase can be directly attributed to Obamacare. Even Jonathan Gruber of MIT, one of the architects of both Obamacare and Romneycare, now admits that many individuals will end up paying more for insurance than they would have without the reform — even after taking into account government subsidies — and that those increases will be substantial. According to Gruber, “after the application of tax subsidies, 59 percent of the individual market will experience an average premium increase of 31 percent.”
Finally, if the past two years should have taught us anything, it is that we may not be able to keep our current insurance, even if we are happy with it. The CBO suggests that as many as 20 million workers could lose their employer-provided health insurance as a result of Obamacare. Instead, they will be dumped into government-run insurance exchanges. And, the recent dust-up over insurance coverage for contraceptives is a clear illustration of how the government will now be designing insurance plans for all of us. Regardless of how one feels about the contraceptive mandate itself, it is just the tip of the iceberg as government mandates tell employers what insurance they must provide, and tell us what insurance we must buy, even if that insurance is more expensive, contains benefits we don’t want, or violates our consciences.
Next week, Obamacare will slouch its way to the Supreme Court. How the justices decide will be based on questions of constitutional law. Their decision will set a crucial precedent in setting the boundaries between government power and individual rights. But regardless of whether the Court upholds Obamacare or strikes it down, in whole or in part, we should understand that, simply as a matter of health-care reform, Obamacare is a costly and dangerous failure.
— Michael Tanner is a senior fellow at the Cato Institute and the author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.