Wow. National Journal really booted one today on the Affordable Care Act.
The National Journal analysis, reported by Clara Ritger, claims that Republicans who claim that Obamacare will raise insurance costs for consumers “might be right.” Why?
For the vast majority of Americans, premium prices will be higher in the individual exchange than what they’re currently paying for employer-sponsored benefits, according to a National Journal analysis of new coverage and cost data. Adding even more out-of-pocket expenses to consumers’ monthly insurance bills is a swell in deductibles under the Affordable Care Act.
Okay, take a minute and think about what this actually says. It says nothing about people currently on the individual market who will stay on the individual market. Nothing about people currently covered by employer-connected insurance who will stay on employer-connected insurance. Nothing about those with employer-connected insurance who would be losing it anyway — a long-term trend that Ritger does mention later in the article.
No, this is only about anyone who is dumped onto the new exchanges by Obamacare. So to begin with, we’re only talking about a very small sliver of all insurance customers.
Even for that group, however, the analysis appears to be completely wrong, because it misses one key fact: Employers don’t provide health insurance for employees out of some sort of weird altruism. They provide health insurance as part of employee compensation. That compensation is in the form of health insurance because it makes sense for both sides (thanks to tax treatment of wages and benefits). If that changes — if compensation through health insurance no longer saves both sides money — what would presumably happen is that employers would either substitute higher wages or other benefits. And yet National Journal apparently doesn’t factor that in at all to its calculations.
In other words, all they’re saying here is that if employers react to Obamacare by slashing compensation, then employees will be worse off. Well, yes — but there’s no reason to believe that employers would be able to do so any more after ACA than before.
I’m not an economist, so I’m not going to make any effort to estimate what that does to the National Journal “analysis” — other than to suggest it should be tossed in the garbage until we get a second and better draft. Yeah, it appears to be that worthless.
This isn’t to say that the ACA produces only winners. Wealthy employees who have had excellent (taxpayer subsidized!) insurance in the past may, in fact, do worse, for example. What’s more, National Journal only has initial estimates of what plans in the exchanges will look like; over time, we don’t know how they’ll change. And, yes, there is surely a fair amount of uncertainty about how employers will react over time.
What we do know, however, suggests that this National Journal analysis doesn’t get it right, at all.