“Already, the Affordable Care Act is helping to slow the growth of health-care costs.”
— President Obama, State of the Union address, Feb. 12, 2013
“Obamacare, it was supposed to help middle-class Americans afford health insurance. But now, some people are losing the health insurance they were happy with. And because Obamacare created expensive requirements for companies with more than 50 employees, now many of these companies aren’t hiring. Not only that, they’re being forced to lay people off and switch from full-time employees to part-time workers.”
— Sen. Mario Rubio (R-Fla.), GOP State of the Union response, Feb. 12, 2013
Obama’s health-care law was in many ways the dog that did not bark during the State of the Union. Obama felt no need to defend it, and Republicans no longer declared that they would repeal it. Rubio simply referenced “Obamacare” as a government program that could hurt the middle class — while Sen. Rand Paul (R-Ky.), in the tea party response, made no mention of the health-care law.
In other words, the law is more or less here to stay. The race is now on to define the law’s legacy and impact.
Let’s take a look at whether either man has the facts to back up their diametrically opposed statements.
We’ve written before about the effort by some Democrats to jump the gun on the impact of the health-care law — much of which has not been implemented. In the State of the Union address, Obama is more boldly making a connection between the law and a recent slowdown in health-care costs that former president Bill Clinton had also suggested in his speech at the Democratic National Convention last year.
National health expenditures grew at an estimated annual rate of 4.3 percent in 2012, resulting in the fourth straight year of about 4 percent growth — a record in the past half-century. At this point, no one is really quite sure why health-care costs have suddenly slowed — but many analysts believe the Great Recession played an important role.
Obama did not claim a huge link between the health-care law and the slowdown in health costs, just that it is “helping” with the trend. That may mean a lot — or a little. But in any case, no analyst can really understand the impact of the law until it fully kicks in and its effects can begin to be measured.
In fact, government actuaries last year published an article in Health Affairs predicting health-care costs would begin to spike — to an annual rate of 7.4 percent in 2014 — as the health-care law was implemented. “For 2011 through 2021, national health spending is projected to grow at an average rate of 5.7 percent annually, which would be 0.9 percentage points faster than the expected annual increase in the gross domestic product during this period,” the article said.
Meanwhile, Rubio is also jumping the gun. First of all, he declares that “some people are losing the health insurance they were happy with.” As we have noted, the law has largely not taken effect, so it’s hard to see how that is already happening.
We initially assumed that Rubio was referring to a recent Congressional Budget Office forecast that 7 million people will lose their health-care coverage from their employers by 2023 because of the law. (The estimate essentially doubled from a forecast over the summer, partly as a result of lower income tax rates.)
But if you look closely at the CBO chart, it shows a gain of 1 million people to employer rolls in 2013 — presumably young adults under 26 being added to parents’ policies — and negligible impact in 2014 — because, as we noted, the law has not been fully implemented. The decline in employer-based insurance does not begin until 2015.
A Rubio spokesman pointed us to another CBO estimate — that household employment would be reduced by one-half of 1 percent, or about 800,000 jobs, over the next decade as a result of the law. This is a complex issue which we have examined before, but it has little to do with people losing health insurance. (In fact, the decline in jobs is mostly due to people leaving the workforce because they hold a job only so they can get insurance.)
The spokesman also pointed us to a number of articles detailing anecdotal evidence of companies cutting jobs or deciding not to cross the 50-person threshold because that’s when the employer mandate kicks in. We also found similar articles, such as one quoting the chief executive of Tasti-D-Lite as saying the requirement would hinder franchise growth. Another quoted an anonymous business owner saying he fired two people to get below the 50-person threshold; the head of an Applebee’s franchise declared he would not build more restaurants.
But at this point, some — or a lot — of this may be excuse-making or empty threats. It’s hard to tell what actually will happen when the law takes full effect — and whether these businesses would truly give up the potential for growth because they are constrained by the law’s requirements. It is equally possible these executives will simply pass on the increased cost of health insurance to customers.
The Pinocchio Test
Both Obama and Rubio are turning predictions into facts — for a law that has not fully taken effect. It is quite possible that the cost savings that Obama claims or the job losses that Rubio foresees — or both — will one day happen. But neither man can marshal enough evidence to prove the reality they claim has already taken place.
Both men earn Two Pinocchios.
Check out our candidate Pinocchio Tracker