#264: Obamacare, Year One

Published March 21, 2011

One year in to President Barack Obama’s national health care regime, what you think of his signature domestic policy accomplishment depends a great deal on if you’re listening to his allies or not.

If polls are any indication, most Americans don’t believe what they’re hearing from those sources–and with good reason. This morning, Washington Post fact-checker Glenn Kessler ran down the problems with the spin shared by Obamacare’s fandom. An excerpt:

“It’s about reducing the deficit. Again, it reduces the deficit more than $1 trillion over the life of the bill.”
— Pelosi

This is another bogus statistic for which we have previously awarded three Pinocchios.

The CBO estimated $143 billion in deficit reduction over 10 years in the health-care law, but about $19 billion of it came from unrelated items. As we have noted, the remaining $124 billion was based on a number of assumptions that called that estimate into question.

But Pelosi claims more than $1 trillion in deficit reduction by using a 20-year figure that is particularly absurd.

As we wrote in January: “There are too many uncertainties to be precise, and the CBO itself merely offered a tentative guess of a “broad range of around one-half percent of GDP,” with significant caveats. Democrats simply took that percentage, multiplied it against the predicted size of the GDP 20 years from now (itself a pretty fuzzy figure) and, presto, they had a number. But it’s a fairly meaningless one.”

What’s striking about so many of the errors he details is that they’re hardly falsehoods that have been newly debunked. In fact, in the case of many of the promises still rolled out by the law’s supporters, they’re not even stale any more–they’re ancient, in political terms.

Take, for example, President Obama’s continued invocation of the “if you like your plan you can keep it” promise, cited by Senate Minority Leader Mitch McConnell in his remarks on the anniversary (which Kessler gave a far more positive grade). This promise has gone from the realm of “unlikely” to “laughable” to “insulting” over the past year, as insurers have shut down and others have announced dramatic rate hikes and shifts. The fact that Obama and his supporters continue to make this claim even today suggests they are operating under the assumption that most Americans are too stupid or disengaged to notice such an obvious lie.

Paying close attention to the promises and laudatory comments from Obama’s supporters does reveal a great deal of truth, however, when their own closely held opinions slip out. This week, Capitol Hill Democratic institution John Conyers (D-MI) shared his view with a refreshing degree of honesty. He noted in an appearance at the National Press Club that he and Rep. Dennis Kucinich supported the law, even with “all its flaws,” because “without it… it would’ve taken us another decade or longer to get single payer up and going.”

Let’s say this for Rep. Conyers: This is one statement from a supporter of Obama’s law that, unlike nearly all the other praises and press releases we’ve read, happens to be entirely true.

— Benjamin Domenech



Cato’s Michael Cannon’s anniversary piece at Kaiser Health News is a tidy and useful read:

Opposition to the law contributed heavily to sweeping Republican gains in the 2010 elections. The House quickly voted to repeal it. Twenty-one governors have threatened not to implement it. At least four states have frozen, returned or refused the federal funds it offers. Two governors have flatly refused to implement it.

Despite assurances that Americans would like the law once they found out what is in it, familiarity has bred contempt. Public opinion shifted against the law the moment the first draft appeared in Congress in June 2009, and a majority or plurality of the public has consistently opposed it ever since. Among likely voters, opposition leads support by nearly 20 points. The law’s supposed beneficiaries are among the most hostile groups. A recent poll found seniors oppose the law by 12 points. Small businesses are among those suing (so far successfully) to overturn it.

This isn’t how it was supposed to happen. Universal coverage never provoked such a backlash in other countries, nor did Social Security, Medicare or Medicaid. What’s going on?

The truth is that this isn’t the reform even the left actually wanted. A mishmash of a policy designed to please everyone has pleased very few, and disrupted many more.

SOURCE: Kaiser Health News


Here’s a lovely excerpt from Page 13 of the CBO’s report on Obama’s 2012 budget. It notes in part (emphasis mine):

Outlays for health insurance tax credits and cost-sharing subsidies for people who purchase coverage through exchanges are now projected to be about $54 billion higher over the 2012–2021 period than CBO projected in January. (In addition, CBO and JCT now estimate that the loss of revenues attributable to tax credits for insurance premiums will be about $45 billion larger than previously estimated.)

Updating baseline projections of federal spending on health care programs does not automatically result in a complete reestimate of the budgetary impact of last year’s major health care legislation under the assumptions of the new baseline. However, the costs or savings from some aspects of that legislation can be separately identified in the baseline projections. In particular, the provisions related to expanding health insurance coverage were projected to increase the deficit between 2012 and 2021 by $1.04 trillion, on net, in CBO’s January baseline; they are now projected to increase the deficit by $1.13 trillion over that period.

Now, CBO still maintains that other revenues from the law would reduce the deficit by $1.25 trillion over the same period – for a net of a little more than $110 billion in reductions. But these reductions are, as we’ve covered before, an uncertain proposition at best, and in some cases simply unbelievable, and more than wiped out by other portions of the law.

If the president would indeed like to get serious about deficit reduction, as he’s claimed, perhaps he should pay attention to [http://www.cbo.gov/ftpdocs/120xx/doc12085/03-10-ReducingTheDeficit.pdf]another CBO projection released this month], which shows block granting long term care under Medicaid would result in a deficit reduction of $287.4 billion over a decade. Even accepting the White House’s ridiculously generous predictions about Obamacare’s fiscal benefit, by the same measures, block granting Medicaid’s long term care would more than double their savings!

SOURCE: Congressional Budget Office


Writing at the Baltimore Sun over the weekend, John Hartigan argues that “very few of the 4,686 U.S. hospitals providing patients with Medicare Part A services are going to be able to boost their productivity enough to make up for the new reimbursement reductions” mandated under Obama’s law. He quotes Medicare chief actuary Richard Foster on the subject, which leads to this:

What Mr. Foster is telling us is that deducting the legislatively presumed productivity savings from Medicare reimbursements would gradually turn more than 700 of our hospitals into chronic money losers. And — while he doesn’t spell out what would happen when those hospitals eventually had to shut down — there’s no doubt that the impact would be devastating. Patients in rural areas would have to travel long hours to get to the nearest hospital still open for business, and patients everywhere would have to put up with critical shortages of beds, operating rooms and ICUs, as well as badly overcrowded clinics and emergency rooms.

Not only that, care would almost certainly have to be rationed. Grandpa might not get his heart bypass. His daughter might not get her mammogram. And his grandson would probably have to wait months for surgery to repair a sports injury.

Despite all this, HHS has no plans to intervene. Brushing off Mr. Foster’s warnings, his superiors insist that the new Medicare reimbursement reductions won’t cause any harm to hospitals or the communities they serve because hospitals can “become more productive” if they “invest in system changes.” But that’s just bureaucratic posturing. In order to survive the reductions, a typical 200-bed hospital would have to achieve long-term productivity savings of about $7 million per year, and investing in “system changes” couldn’t possibly cut payroll costs by that large an amount.

While I don’t agree with all of Hartigan’s conclusions here, the key point is that these mandated reductions will inevitably lead to cutbacks felt by patients in very real terms. In that scenario, the decision-making power will forever reside in Washington–never with the individual.

SOURCE: Baltimore Sun


An interesting study in the New England Journal of Medicine crunches the numbers on obesity and finds them to be fairly lacking. That shouldn’t be surprising, considering how many of them are self-reported:

Americans are continually bombarded with statistics on obesity. The media are filled with news reports celebrating the possible shrinking of our waistlines or lamenting their ongoing expansion. Some recent studies have suggested that U.S. obesity rates are continuing to increase. For example, state- and national-level data from the 2009 Behavioral Risk Factor Surveillance System (BRFSS) of the Centers for Disease Control and Prevention (CDC) showed increases between 2007 and 2009 in the reported prevalence of obesity among adults — a 1.1% increase nationally, or an additional 2.4 million or so obese adults. Such data have led some investigators to suggest that by 2050, an enormous percentage of Americans — perhaps approaching 100% — will be overweight (defined in adults as a body mass index [BMI, the weight in kilograms divided by the square of the height in meters] above 25 but below 30) or obese (BMI >30). Other reports, however, suggest that the U.S. obesity prevalence, though very high, has stabilized. Results from the CDC’s 2007–2008 National Health and Nutrition Examination Survey (NHANES) suggest that the prevalence of obesity among women (35.5%) and children 2 to 19 years of age (16.9%) has remained stable over the past 10 years and that the prevalence among men (32.2%) has not changed significantly since 2003. These conflicting reports have led to confusion regarding the prevalence of, and secular trends in, obesity in the United States.

Some serious and reliable data are needed here. Far too many public policy steps have been taken, and continue to be taken, based on assumptions about obesity that may be inaccurate.

SOURCE: The New England Journal of Medicine


James C. Capretta testified before the House Budget Committee last week, delivering what I think serves as a powerful argument in favor of consumer-driven health care.

Moving toward a defined-contribution approach to reform would allow for much greater federal budgetary control, which is of course a primary objective and tremendously important for the nation’s economy and long-term prosperity. But this isn’t just a fiscal reform. It’s a crucial step toward better health care, too, because it would put consumers and patients in the driver’s seat, not the government.

With consumers making choices about the kind of coverage they want as well as the type of “delivery system” through which they get care, the health system would orient itself to delivering the kind of care patients want and expect. Critics argue that this improved fiscal outlook that would flow from moving toward defined contribution health care would come at the expense of the beneficiaries, who would bear the entire risk of costs continuing to rise faster than the government’s newly fixed contribution.

But that would only be the case if building a functioning marketplace had no discernible impact on the productivity of the health sector. It is far more likely that converting millions of passive insurance enrollees into cost conscious consumers will have a transformative effect on health care delivery, and for the better. There would be tremendous competitive pressure on those delivering services to do more with less, and find better ways of giving patients what they truly need. Any health sector player that did not step up and improve its productivity would risk losing substantial market share among seniors, working people, and those on Medicaid. In other areas of our economy that have gone through a consumer revolution, the transformation of the industry has been stunning.

A year after we took the wrong path on health policy, it’s important to remember that going back to where we were isn’t a solution. This should be a strong reminder of that fact.

SOURCE: Budget House Committee