The Studies Are In, and Obamacare is Failing Miserably

Impact

May 27, 2013

In 2009, President Obama set out on a brave new experiment. He nearly socialized an entire sector of the economy with guarantees of cost control, better health outcomes, and financial stability in general. The plan was so “comprehensive,” it was hard to tell exactly what it would do. Indeed, former Speaker Nancy Pelosi (D-Ca.) remarked, “We have to pass the bill so that you can uh, find out what’s in it.” Now that we know more about the health law, many, including typical allies of the president, are raising red flags. Sen. Max Baucus (D-MT), one of the chief architects of the bill, recently said the law’s implementation was headed for a “train wreck.”

Here are four reasons I also think the bill is a train wreck:

1. Costs

Regulating health care to produce cheap insurance sounds great, but Obamacare's burden on businesses, government, and the average citizen is staggering. On May 3, the House Energy and Commerce Committee released a report about the potential increases in health insurance costs for small businesses and other consumers. The results made the Affordable Care Act seem like anything but affordable.

Congressmen collected estimates of the ACA’s impact from 17 of the nation’s largest insurers. The report found that premiums for a new business would increase by an average of 96 percent. Estimates for costs to the consumers ranged from 100 to 400 percent increases in premiums. Democratic Senator Chuck Schumer (D-NY.) echoed this sentiment when he admitted Obamacare was part of the reason insurance costs might go “through the roof.”

2. Burden on the Middle Class

A big selling point for the Affordable Care Act was its protection for the middle class. “I continue to insist that health reform not be paid for on the backs of middle-class families,” President Obama said in his 2009 press conference. But the centerpiece of his reform is a new, widespread tax in the form of an “individual mandate.” The Supreme Court made that much clear when it announced its landmark ruling last summer.

In theory, an individual mandate is supposed to contain costs by forcing massive amounts of healthy people to enter a market saturated with high-risk coverage. Because they do not need as much care, their premiums can support those that do. It sounds like a great idea as participants in a traditional insurance pool support each other this way. But, Obamacare puts customers into a giant exchange where certain things are covered according to government mandates, not market forces. The result of all these mandates and regulations is a much higher burden on the middle class. This burden takes many forms:

- First, premium increases (see above).

- Second, job losses. Since President Obama was re-elected last November, employers have been rapidly laying off employees or forcing them into part-time work. Many specifically cited the new health law as a reason. A survey from the IFA showed that 31% of franchisees planned to reduce their workforce in order to comply with Obamacare. Another IFA study showed that roughly 3.2 million full-time employees would be in limbo because of the law.

- Third, lower paychecks. All of the compliance costs associated with Obamacare mean that employers will likely have a lot less money to pay their employees. In February, the New York Times published an article in which a chief executive detailed different ways health care regulations would siphon money from an employee’s paycheck. He also calculated that a 23-year-old employee would pay $1.8 million in health care costs over their lifetime.

You might be asking yourself: I can spare a little for the greater good, right? Even if I have lower pay, won’t this reform still be good for the economy as a whole? Not necessarily. The idea behind President Obama’s 2012 campaign slogan — growing the economy from the middle out and not the top down — was that all economies need demand from the average citizen. This was also the Keynesian concept behind the president’s 2009 stimulus. People need the purchasing power that comes from having more money in their pocketbook. But if Obamacare is sapping everyone’s sources of income, how can the middle class pay for anything to stimulate the economy?

3. Incompetent bureaucrats managing our health care:

Obamacare essentially creates a multi-agency entitlement with incentives for recipients to lobby for expansion and greater contributions from taxpayers, like they did with social security.The idea that Sandra Fluke can demand contraception from a health insurance program opens the flood gates for any interest group to request non-critical health services.

Specifically, Obamacare’s enlargement of government is disastrous for two reasons:

- If the past couple of weeks have taught us anything, it’s that a large, federal government is uniquely prone to abuse. President Obama’s former advisor David Axelrod admitted as much when he tried to excuse Obamafrom any wrongdoing. “Part of being president is there’s so much underneath you that you can’t know because the government’s so vast.” Case-in-point, in the wake of the massive scandal at the IRS, the tax agency was sued for potentially stealing 60 million medical records.

- Choice and competition — Bureaucrats have already failed in implementing ACA. We shouldn’t give them the chance to have enormous power over the market. Choice and competition in health insurance is important to health care for many reasons. It means companies solicit lower prices to give you the biggest bang for your buck. It also means families can choose the right plan for them without having to pay for services they don’t need. But most importantly, it touches on the fundamental freedom of economic choice. The president apparently realized its importance, as he repeatedly said the words “choice” and “competition” in his push for health reform.

But something happened earlier this year that put that idea to rest for a number of small businesses. Last month, Joe Klein of Time Magazine reported that because the administration failed to create a healthcare exchange for the 33 states that refused to do it on their own, small businesses in those states would only have one plan to choose from. Klein reported, “[t]he Obama Administration has announced that it won’t have the exchanges ready in time, that small businesses will be offered one choice for the time being — for a year, at least.” So much for “choice and competition”! This screw up was only one part of the intricate, regulatory scheme that is Obamacare.

4. Roughly half of Obamacare will not make a difference for critical health outcomes.

It sounds like a crazy idea but apparently, it’s true. Liberals at the Washington Post and New York Times went into overdrive avoiding the results of a devastating study on Medicaid released a few weeks ago. The landmark study came from Oregon, where the study was designed in such a way that it gave researchers a rare glimpse into the effectiveness of the program (if you want to read more, go here). Before Ezra Klein, Wonkblog editor, knew the results, he called it “the most important health-care policy experiment since the 1970s.”

It turns out that important study wasn’t good news for Obamacare. The study found that “Medicaid has no statistically significant effect on measured blood pressure, cholesterol or glycated hemoglobin (a measure of diabetic blood sugar control), or on the diagnosis of or medication for blood pressure or cholesterol.”

Here is a graph of the most common causes of death in 2010:

As you can see, having no effect on certain measures of heart health is kind of a big deal.

You don’t have to be a health wonk to see that Obamacare is a disaster. Insurers, businesses, and a landmark health study could all just be getting it wrong, but I wouldn’t bet trillions of dollars and our nation’s entire health care system on that. At this point, we should just give poor people money, not empower incompetent and corrupt government bureaucracies to destroy our health care system. Tell your Senator to take the House’s call to repeal Obamacare.