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Obamacare’s successes, failures will take time, analysis to judge

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By James McCusker
Herald Columnist
Published:
A “national dialogue” is one of those things that Sunday morning smarties tell us we need … when voter support for their side is in some doubt.
It sounds good, and that is exactly why the term is used. It is designed to apply a gel coat of academic respectability to what would more accurately be described as a political barnyard brawl – lots of noise and a few feathers.
The media-driven national dialogue over Obamacare since the March 31 enrollment deadline certainly qualifies on both counts: Tt has been mostly noise and feathers; and neither side is certain how the issue’s public opinion will translate into votes.
For most people not employed by the noise or feather industries the dialogue has been pretty boring. Mostly it involved whether the 7.1 million people who signed up for insurance under the Affordable Care Act represent a success or a failure. It was just slightly less interesting than spending every Thanksgiving dinner listening to your uncle Vince and his brother-in-law arguing over whether the canned cranberry sauce should be eaten with a spoon or a fork.
The most recent addition to the mix was the result of a nationwide Gallup poll that indicated a significant reduction in the number of adults in the U.S. without health care insurance. In the last quarter of 2013 about 18 percent of Americans lacked coverage but by the end of the first quarter of 2014 the number had been reduced to 15.6 percent.
The timing of the 2.4 percentage point reduction in uninsured strongly suggests that the change was driven by signing up for Obamacare. The large number of people involved – 2.4 percent of the adult population represents over 7 million people – suggests equally strongly that the vast majority of people who signed up for Obamacare had previously lacked insurance.
Whether those who signed up did so because the law required them to do so or because they qualified for subsidies isn’t known, so it is difficult to estimate the impact on the federal budget. The subsidy information is needed, also, to calculate whether Obamacare is actuarially on firm ground; that is, whether the number of young people who signed up and don’t need insurance is large enough to support the health care outlays on people who need financial assistance.
The lack of information on who signed up is just one of many problems with interpreting the data. While the Gallup survey has been consistent over the years and is therefore a known quantity, the Obamacare data is all over the map. The system was apparently designed with little attention to the importance or value of its information content. This will be all sorted out eventually, but it is a fragmented system and getting consistent data will take more than a little while.
Will this affect Obamacare’s estimated cost? Yes and no. It will affect the accounting cost and how much shows up in the federal budget. Its impact on actual cost, though, will be considerably less.
Costs in our current health care system have different routes and lots of intermediate stops, but they all end up in the same place: our doorstep. Doctors and hospitals, for example, have to pass their costs on to patients, insurance companies, and government agencies or they would cease to exist. Employers have to pass on their health insurance costs to consumers or their businesses would cease to exist. Insurance companies have to charge premiums that cover their costs or they will go out of business. Governments don’t earn any money on their own and have to pass on the costs of their health care subsidies to taxpayers.
The fact is that we already have a “single payer” health care system and that payer is us. Obamacare will not change that, although it will alter the visible flow of costs.
The Affordable Care Act never did really address the problem of rising health care costs, except to control the profits of health insurers and put the squeeze on doctors, hospitals and Medicare patients. Whether the total cost of health care will be higher or lower under Obamacare in the end, then, is not clear. The improved access to care, for example, may turn out to be a very expensive subsidy, despite young people’s forced enrollments and reductions in the use of expensive hospital emergency rooms.
The total effect of Obamacare goes beyond annual costs and expanding access. There is a destructive side to it that will change health care’s architecture as well as its economics. It will have a dramatic, damaging impact on physicians, hospitals, insurance companies and medical research. Whether this demolition is necessary is an unanswered question and it will be a while before we have a national dialogue on it, let alone an answer.
James McCusker is a Bothell economist, educator and consultant. He also writes a monthly column for the Herald Business Journal.

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