Ten years ago, President Barack Obama signed his eponymous healthcare reform package into law. What does the nation have to show for a decade of Obamacare?
Nothing worth celebrating. Nearly every major provision of the Affordable Care Act has proven a failure. And yet, the Democrats’ approach to this failure of government intervention into the healthcare marketplace is to promote yet more government—whether through a new public health insurance option or outright single-payer health care.
Take Obamacare’s Medicaid expansion, arguably the reform’s most consequential component. In an effort to increase coverage rates, the law made all Americans at or below 138% of the poverty level eligible for Medicaid. That strategy has turned out to be an ineffective and expensive means of trying to safeguard the health of Americans.
For starters, there’s compelling evidence that Medicaid doesn’t do much to improve patient health. One famous study compared patients in Oregon who had been randomly selected for Medicaid with a group of uninsured Oregonians. The authors concluded that, after two years, “Medicaid coverage generated no significant improvements in measured physical health outcomes” for enrolled patients as opposed to those with no insurance at all.
In other words, Obamacare brought 17 million Americans into a health program that fails to improve health. And it did so at astronomical cost to taxpayers.
In 2015, average spending on newly-eligible Medicaid enrollees averaged $6,366 per patient—nearly 50% higher than the federal government projected just a year earlier. Medicaid’s annual spending totals more than $597 billion, according to the most recent available figures, accounting for one of every six dollars spent on health care in the United States.
The program’s exploding costs have put enormous strain on state coffers. States spent an average of 17% of their budgets on Medicaid in 2017. Some states—including Pennsylvania, Rhode Island, and New York—devoted more than one-fifth of their budgets to the program.
At the same time, Obamacare’s Medicaid expansion has made it harder for millions of enrollees to find a doctor. Since the program routinely underpays doctors, many physicians refuse to see Medicaid patients. According to one recent study, nearly 30% of doctors who are accepting new patients won’t take on Medicaid beneficiaries.
Obamacare has also devastated the private insurance market. Consider the impact of guaranteed issue, which prevents insurers from turning away patients based on their health status, and community rating, which bans companies from charging older Americans more than three times what they charge younger, healthier ones.
The combined effect of these two provisions is to enable patients to forgo coverage until they get sick or injured. As a result, they’ve deprived insurance markets of the kinds of healthy, low-cost patients whose premiums are needed to offset the cost of care for older, less healthy Americans.
This, in turn, has led insurers to raise premiums. By 2017, individual premiums on the federal health insurance exchanges were more than double what they were the year before the marketplaces opened for business. Today, the average monthly premium for a benchmark exchange plan is $462, nearly 70% higher than in 2014.
That’s a far cry from President Obama’s infamous 2008 promise that his healthcare plan would cause annual premiums for the typical family to decline by $2,500.
Deductibles for exchange plans are also rising. Average cost-sharing for the typical bronze-level plan exceeded $6,500 in 2020—up more than 27% compared to six years earlier.
As one might expect, these rising prices have put coverage out of reach for many patients who don’t qualify for taxpayer subsidies through Obamacare. Among this group, enrollment in the law’s exchanges dropped 40% between 2016 and 2018.
We shouldn’t be surprised, then, that the uninsured rate is actually rising. Between 2017 and 2018, the uninsured rate rose from 7.9% to 8.5%, representing an increase of more than a million Americans.
After ten years of Obamacare, the cost of coverage is skyrocketing, the nation’s uninsured rate is on the rise, and millions of new patients rely on an unsustainable public insurance program that does little to benefit their health.
If the last decade has taught us anything, it’s that trusting the federal government to remake the health sector from the top down was a mistake—one Americans can’t afford to make again.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All, (Encounter 2020). Follow her on Twitter @sallypipes.
A Decade Of Obamacare Has Been Ten Years Too Many
Sally C. Pipes
Ten years ago, President Barack Obama signed his eponymous healthcare reform package into law. What does the nation have to show for a decade of Obamacare?
Nothing worth celebrating. Nearly every major provision of the Affordable Care Act has proven a failure. And yet, the Democrats’ approach to this failure of government intervention into the healthcare marketplace is to promote yet more government—whether through a new public health insurance option or outright single-payer health care.
Take Obamacare’s Medicaid expansion, arguably the reform’s most consequential component. In an effort to increase coverage rates, the law made all Americans at or below 138% of the poverty level eligible for Medicaid. That strategy has turned out to be an ineffective and expensive means of trying to safeguard the health of Americans.
For starters, there’s compelling evidence that Medicaid doesn’t do much to improve patient health. One famous study compared patients in Oregon who had been randomly selected for Medicaid with a group of uninsured Oregonians. The authors concluded that, after two years, “Medicaid coverage generated no significant improvements in measured physical health outcomes” for enrolled patients as opposed to those with no insurance at all.
In other words, Obamacare brought 17 million Americans into a health program that fails to improve health. And it did so at astronomical cost to taxpayers.
In 2015, average spending on newly-eligible Medicaid enrollees averaged $6,366 per patient—nearly 50% higher than the federal government projected just a year earlier. Medicaid’s annual spending totals more than $597 billion, according to the most recent available figures, accounting for one of every six dollars spent on health care in the United States.
The program’s exploding costs have put enormous strain on state coffers. States spent an average of 17% of their budgets on Medicaid in 2017. Some states—including Pennsylvania, Rhode Island, and New York—devoted more than one-fifth of their budgets to the program.
At the same time, Obamacare’s Medicaid expansion has made it harder for millions of enrollees to find a doctor. Since the program routinely underpays doctors, many physicians refuse to see Medicaid patients. According to one recent study, nearly 30% of doctors who are accepting new patients won’t take on Medicaid beneficiaries.
Obamacare has also devastated the private insurance market. Consider the impact of guaranteed issue, which prevents insurers from turning away patients based on their health status, and community rating, which bans companies from charging older Americans more than three times what they charge younger, healthier ones.
The combined effect of these two provisions is to enable patients to forgo coverage until they get sick or injured. As a result, they’ve deprived insurance markets of the kinds of healthy, low-cost patients whose premiums are needed to offset the cost of care for older, less healthy Americans.
This, in turn, has led insurers to raise premiums. By 2017, individual premiums on the federal health insurance exchanges were more than double what they were the year before the marketplaces opened for business. Today, the average monthly premium for a benchmark exchange plan is $462, nearly 70% higher than in 2014.
That’s a far cry from President Obama’s infamous 2008 promise that his healthcare plan would cause annual premiums for the typical family to decline by $2,500.
Deductibles for exchange plans are also rising. Average cost-sharing for the typical bronze-level plan exceeded $6,500 in 2020—up more than 27% compared to six years earlier.
As one might expect, these rising prices have put coverage out of reach for many patients who don’t qualify for taxpayer subsidies through Obamacare. Among this group, enrollment in the law’s exchanges dropped 40% between 2016 and 2018.
We shouldn’t be surprised, then, that the uninsured rate is actually rising. Between 2017 and 2018, the uninsured rate rose from 7.9% to 8.5%, representing an increase of more than a million Americans.
After ten years of Obamacare, the cost of coverage is skyrocketing, the nation’s uninsured rate is on the rise, and millions of new patients rely on an unsustainable public insurance program that does little to benefit their health.
If the last decade has taught us anything, it’s that trusting the federal government to remake the health sector from the top down was a mistake—one Americans can’t afford to make again.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All, (Encounter 2020). Follow her on Twitter @sallypipes.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.