As an added bonus, we have included above a nifty video by our colleague Sarah Kliff, who explains how Obamacare is supposed to work, in just two minutes.
“For 85 to 90 percent of Americans who have health insurance, there are no worries”
A vast majority of Americans already have health insurance and many get it through their employers. But contrary to the implication that only people with no insurance or poor insurance will have to worry about implementation, there are a variety of studies and reports that suggest that, beyond those groups, some 10 million people face the prospect of losing their current health care.
According to the Congressional Budget Office’s most recent estimate, by 2018, after the law is fully implemented, 7 million people will be dropped from their employer health plans and 5 million people will shift out of private plans. (Note: this is updated from the numbers listed in the original column.)
Not all of the people who shift out of private plans are currently in bad plans; some may simply be priced out of the market as rates increase. And even unions, which were big supporters of the law, have grown wary because it may drive up costs for their health-care plans.
Many of the law’s new taxes, including a Medicare surcharge and taxes on investments for the wealthy, take effect this year. That’s a total of $1 trillion between 2013 and 2022. Meanwhile, the Medicare actuary also has warned that the sharp reductions in payments to Medicare providers could force the closure or exit from Medicare of 15 percent of hospitals, skilled nursing facilities, and home health agencies by 2019 — and 40 percent by 2050.
In other words, the impact may well be felt even by people who are happy with their current insurance.
“The Affordable Care Act is helping to slow the growth of health-care costs.”
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. 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.
Still, despite all the claims and counter claims, no analyst can really understand the impact of the law until it fully kicks in and its effects can begin to be measured.
“Americans have saved $3.4 billion in premiums, on top of rebates, in 2012”
The law contains a provision under which insurance companies must rebate a portion of the premiums if they spent less than 80 percent of the premium on medical care and efforts to improve care. In 2012, insurance companies shipped about $500 million in rebates, about $100 per family, though much of the savings ended up with the companies providing health insurance.
But President Obama has gone further and claimed that insurance companies further reduced their premiums in order to avoid having to send out rebates. But experts said the estimate was based on fuzzy reasoning and it is quite possible other factors were responsible.
“Obama promised to cut insurance premiums by $2,500 but they have risen by $3,000”
Obama made a dubious pledge in the 2008 campaign, ridiculed by fact checkers at the time. (It came with a caveat: he was not saying premiums would fall by $2,500, but that health-care costs per person would be that much lower than anticipated.)
But the claim of $3,000 in higher premiums is a non sequitur, based on a Kaiser Family Foundation survey. The health care law has not been implemented yet, and the Kaiser survey, in fact, makes no judgment on whether the Affordable Care Act has played much of role in the increase in premiums. Indeed, the rate of the increase under Obama, a little under 6 percent per year, is more than half the rate of premium increases in the decade before Obama took office. The raw numbers, thus, obscure what many would consider to be a good-news story.
Still, as we have noted in another column, the law mandates a robust package of benefits and requires that the amount an older individual pays will be no more than three times what a younger individual pays. So some people, such as a young male who currently has a plan that does not include all of the required benefits, are likely going to have sticker shock.
“The IRS will be in charge of your health care”
The IRS certainly has an important role in implementing the law, particularly in collecting the taxes and penalties that help fund the expansion of health care to millions of Americans.
But it’s too much to suggest that the IRS would now be running health care in the United States, especially since the law leaves the employer-based system largely intact. The IRS, by contrast, is mostly the bill collector. It will validate whether people have insurance, but it will have no access to private health-care data.
“Obamacare is a job killer”
There’s no link in the headline to a particular column because this is a recurring theme, with various data points that opponents point to.
We have exposed a misleading poll, issued by the U.S. Chamber of Commerce, which suggested 75 percent of small businesses surveyed would fire workers or cut hours under Obamacare. Not only was this an Internet opt-in poll, which meant it shed little light on the opinions all small business owners, but the real figure was under 8.5 percent.
We have also written repeatedly about a CBO estimate that is frequently portrayed as saying the law would kill 800,000 jobs. The reality is more prosaic. Boiled down to plain English, the CBO essentially says that some people, who are now in the work force because they need health insurance, will decide to stop working because Obamacare guaranteed they would have access to health care. The 800,000-figure stems from a very rough guesstimate (percentage of gross domestic product) of the impact a decade from now.
As for the frequent claims about the impact of Obamacare on part-time employment, there’s really not enough data to make a judgment. Yes, there are anecdotes here and there, but none of that adds up to a real trend. We encountered this issue when we examined the case of the City of Long Beach amid reports that it was shifting 1,600 workers to part-time because of the health care law. The initial reports were overstated.
Still, one would expect the law to have some impact, especially at the margins. As of 2015, companies with more than 50 full-time workers must provide health insurance to all workers or face a $2,000 per person penalty, after the first 30 full-time employees. There also is a separate $3,000-per-employee targeted penalty if the employer coverage is inadequate or unaffordable, though it can’t exceed the first penalty. Moreover, a full-time job is defined as just 30 hours per week.
The majority of firms with more than 50 employees — about 96 percent — already offer health-care coverage, but not necessarily to all employees. By one estimate, derived from Employee Benefits Research Institute research by an Obamacare critic, 46 percent of the nation’s uninsured workers are employed by large firms.
At the moment, we just have noise. Goldman Sachs, in a research report, cautioned that “while it is possible that the trends over the last few months might reflect the approaching onset of the now-delayed employer mandate, it is also important to note that the shift toward part-time labor pre-dates enactment of the health law and is much more clearly associated with the economic downturn.”
It will take probably three years of data to understand fully how Obamacare has affected labor markets. So, in the meantime, pay little attention to such “job-killer” claims.
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