According to many conservative pundits, Obamacare is a job killer. Five days before Obama signed the law, in fact, speaker John Boehner declared that the president was pushing “his job killing government takeover of healthcare that will hurt small businesses.” Years after the law was passed, critics continued trumpeting this theme, Ted Cruz calling Obamacare “the biggest job-killer in this country,” and even claiming that “millions of Americans have lost their jobs” because of the law.
Are the critics right? Liberals point to steady national job growth since passage of the law as evidence that Obamacare has not killed jobs. Conservatives point out that, for all we know, job growth would have been even higher had Obamacare not become the law of the land. Both sides are caught in a rhetorical standoff, seemingly with no way to confirm or refute either side’s argument.
Fortunately, social science gives us ways to move beyond data-deficient arguments to something more substantial. In the case of Obamacare, a strange twist in the law has given social scientists an opportunity to study a natural experiment. That experiment relates to the expansion of Medicaid that was written into the law, an expansion that was supposed to be mandatory for all states. Medicaid is a program jointly run by the government and individual states to provide healthcare coverage to low income people. After Obamacare was passed into law, the Supreme Court ruled that this Medicaid expansion cannot be mandatory, and gave states the option of deciding whether or not to expand their programs. This variation in expansion is what allows policy analysts to study this natural experiment.
Here’s the basic idea: If Medicaid expansion kills jobs, then all else equal, states that expanded Medicaid should have worse job growth than those that did not. For instance, Medicaid could reduce people’s incentives to work, because they no longer need jobs to pay for healthcare coverage. Or it could kill jobs by increasing federal and state taxes, thus leaving Americans with less money to invest in the economy. To test out the effect of Medicaid expansion on employment rates, Angshuman Gooptu and colleagues compared employment rates before and after the Obamacare Medicaid expansions went into effect, and compared these before and after differences in states that did and did not expand Medicaid eligibility. This is what is known as a difference in difference analysis or, as the cool kids call it: “diff in diff.” In studying employment, the researchers focused on low income workers, the ones most likely to be affected by Medicaid expansion.
Because of Obamacare, more Americans have healthcare insurance and therefore more people are able to pay for medical care when they receive it. As a result, there has been a $5.7 billion drop in uncompensated hospital care just in those states that, per Obamacare, expanded Medicaid eligibility:
Cigarette smokers have rights. No one should be able to tell an adult that she can’t spend her hard earned money on cigarettes. But non-smokers have rights, too. Specifically, they shouldn’t have to pay to subsidize health care costs of people who choose to smoke. In fact, smokers hurt non-smokers by racking up health care expenses brought on by the hazards of their habit.
The folks behind Obamacare thought they’d figured out how to respect everyone’s rights, by giving healthcare insurance companies the ability to charge higher premiums – a surcharge – for smokers, up to 50% higher in some parts of the country. The idea is simple: smokers have the right to smoke, but not the right to pass on the increased cost of their health care to others.
The idea is also dead wrong. Higher insurance premiums price smokers out of insurance markets. When an uninsured smoker gets emergently sick, that means hospitals and clinicians don’t get reimbursed, which forces them to pass those costs on to people with insurance. When insurance companies price smokers out of their products, we all pay.
Fortunately, there’s a simple solution to the problem. To appreciate the solution, let me expand on the flaws in healthcare insurance surcharges.
(To read the rest of this article, please visit Forbes.)
Obamacare is a big, messy law with so many moving parts, it is often hard to tell how well it’s working. People debate whether it is killing jobs or creating them; they argue about whether it is lowering medical expenses or raising them. These debates often feel irresolvable because the law, being a national one, doesn’t allow for easy analysis. When an entire health care system changes in all 50 states simultaneously, it’s difficult to know what the world would have looked like if the law hadn’t existed.
That’s one reason the Obamacare Medicaid expansion is so interesting. You see, 19 states have refused to expand their Medicaid programs, leaving us with a kind of experiment – we can compare what happened in those 19 states with what happened in the other 31. That’s what Laura Wherry and Sarah Miller did in a study published in the Annals of Internal Medicine. In fact, that’s how we know that Obamacare causes diabetes.
Let me explain.
Wherry and Miller used data from the National Health Interview Study, looking at responses from people with incomes less than 138% of the federal poverty limit. In states that expanded Medicaid, all such people now qualify for healthcare coverage. But in states that didn’t expand, Medicaid eligibility is typically more stringent, as low as 75% of the federal poverty limit in some states. Wherry and Miller looked at data from before and after Obamacare expansions went into effect, to see how things changed in expansion versus non-expansion states. To read the rest of this article, please visit Forbes.
Most people in the United States get health insurance either through their employer or through government programs like Medicare and Medicaid. But some people have to find other ways to get healthcare insurance, with an increasing number of people doing so through the Obamacare exchanges, or “marketplaces.” In fact, according to the Kaiser Family Foundation nearly 2/3 of people in this situation can thank the Affordable Care Act for their access to healthcare insurance:
With increasing frequency, when people purchase health insurance through things like the exchanges, their purchasing plans have high deductibles:
15 years ago, if I told you that a president came into office, instituted a marketplace for healthcare insurance, a marketplace that caused an increasing percentage of Americans to end up in high deductible “consumer directed health plans” – you’d have told me that must have been a Republican president. Go figure.
Here is some polling data, on a wide range of health and healthcare issues. It shows pretty consistently that Americans trust Democrats more than Republicans on these issues:
I think it’s time for Republicans to move beyond “repeal and replace” and start showing the American people that they have productive ideas about how to improve their health and healthcare.
For much of the history of U.S. medical care, hospitals and physicians have existed as separate financial entities. Physicians in the U.S. have typically been self-employed, as solo or group practitioners and not as hospital employees. An internist like me might have admitting privileges to several local hospitals. When we admit patients to one of those hospitals, we bill insurance for our services. The hospitals send insurers separate bills for hospital related expenses. Physicians and hospitals have depended on each other to conduct their business, but they have done so while largely maintaining their financial independence.
The U.S. government is trying to change that. The Medicare program is encouraging healthcare providers to consolidate forces into entities like accountable care organizations, in hopes that such integration will increase healthcare efficiency. These hopes exist because some of the most respected healthcare institutions in the country – places like the Kaiser Permanente system and the Mayo Clinic – have long integrated their physicians with hospitals. Indeed, some contend that this integration creates more efficient care.
Such integration could end up costing lots of us lots of money. When hospital and physician practices join forces, healthcare prices often rise.
That’s certainly the conclusion of a study published in JAMA Internal Medicine, led by Hannah Neprash out of Harvard Medical School. Neprash and colleagues explored what happened to healthcare spending when physicians and hospitals integrated. They discovered that outpatient spending rises as physicians gain market power through their hospital alliance. The spending increases are due almost entirely to price increases. Here is a picture of their findings. The main thing to note is that the taller bar, in each pair of bars, is the increase in healthcare prices while the shorter bar is the increase in utilization, following consolidation of physician practices and hospitals:
The tall bar on the left reflects a large increase in outpatient spending after hospitals and physicians integrate. The shorter bar right next to it reflects a modest, and statistically insignificant, increase in outpatient utilization at the same time. Spending rises while utilization stays flat – that can only happen because the price of services has gone up.
For a while last fall, it looked like the Obamacare health insurance exchanges were spinning towards a death spiral. Enrollment in the health insurance exchanges was not growing as rapidly as many people had hoped. United Healthcare, one of the nation’s largest insurers, announced that it intended to pull out of the exchanges soon, convinced that there are not good profits to be made in that marketplace. The company even decided to cut commissions for insurance agents who direct consumers to the exchange. Some experts warned that the exchanges are entering what policy wonks call a “death spiral,” whereby insurance premiums would rise each year, forcing relatively healthy people out of the market, causing premiums to rise again the next year, and so on.
With a few months of enrollment figures now behind us, it is safe to say that rumors of an Obamacare Death Spiral have been greatly exaggerated. While the health insurance exchanges still face many challenges, they appear to be holding steady, and with a few modest policy changes could transform into a robust marketplace.
The healthcare exchanges were established by Obamacare as places people can go to shop when they don’t receive insurance through their job or through the government. The exchanges are a major method through which the law expands the private health insurance market. But as new markets, they are risky places to do business. With employer-based insurance, insurance companies have had decades to figure out how to price their premiums. But with these new markets, they have been forced to base initial prices on their best guesses of how many people would sign up through the exchanges and, even more critically, of how sick those people would be. If only the sickest of the sick sign up, then premiums need to reflect the high cost of covering their predictably high healthcare needs. New evidence is out showing just how sick those early enrollees were. But even more importantly, the evidence shows that with the passing of each month, new enrollees have been coming from healthier and healthier stock. If these trends continue, the price of premiums should soon settle into much more affordable territory, and the rise in premiums from year to year should become much less significant.
What evidence supports these conclusions? (To read the rest of this article, please visit Forbes.)
The United States far outspends peer countries on healthcare. When American politicians complain about these high healthcare costs, they often vilify pharmaceutical and insurance companies for profiting at the expense of the general public. As I wrote earlier, such vilification is misguided, pushing too much of the blame on individual actors rather than on the system that incentivizes individuals to act those ways.
So what it is about the system that politicians believe is to blame for the staggering cost of medical care in the United States? To get a sense, I asked a team of research assistants to scour presidential candidate speeches and websites, to see what or who they say is responsible for high healthcare costs. Our methodology was admittedly unscientific. We didn’t have access to every speech that each candidate made, for instance, or every television interview that each candidate conducted. And we made arbitrary judgments about which issues candidates mentioned versus which ones they emphasized, when they discussed healthcare costs. Those caveats aside, we got a pretty solid picture of how candidates, past and former, portray America’s healthcare costs problem.
Not surprisingly, these portrayals vary dramatically across party lines: Who Presidential Candidates Blame for Healthcare Costs Here is what strikes me about this picture, in no particular order. (To read the rest of this article, please visit Forbes.)