Economic Growth Improved Health Coverage More Than Obamacare Did
(A version of this Health Alert was published by Forbes.)
The RAND Corporation has published a thorough analysis of Obamacare’s effect on health insurance that should have put an end to the Obamacare success narrative. Unfortunately, too many continue to confuse the effect of the delayed recovery with Obamacare. What the RAND study really shows is that employer-based benefits have been restored as jobs have started to come back.
The headline is that 172.7 million people, ages 18-64, are covered in 2015, versus only 155.8 million in 2013. The number of uninsured dropped by 16.9 million from 42.7 million to 25.8 million, falling from 21.5 percent to 13.0 percent of the population in that age group.
However, the RAND survey examines people insured or uninsured at a point in time, reporting changes from September 2013 through February 2015. The good news is the number of people with employer-based benefits increased by 8 million, from 111.9 million to 119.9 million (The total population is adjusted for death, aging and migration over the period.) Digging deeper, it looks like this improvement would have been much higher, but for Obamacare.
Consider how the uninsured received coverage from September 2013 to February 2015. One conservative talking point is that the reduction in uninsured was more due to Medicaid than Obamacare exchange coverage. That is true: 6.5 million uninsured became dependent on Medicaid, while 4.1 million went on poorly functioning Obamacare exchanges. Medicaid is worse than Obamacare exchanges because Medicaid is total dependence on government welfare. It is wrong to characterize it as health insurance. Obamacare exchanges are funded partially by tax credits and partially by beneficiaries themselves. However, 9.6 million uninsured people received employer-based benefits, which is more than went to either Medicaid or Obamacare exchanges.
That is the best news of all because employer-based benefits are fully paid by employees as trade-offs for wages: They are not subsidized by other taxpayers, (They are exempt from taxable income, but that does not by itself impose a direct cost on other citizens.) There is a wealth of evidence Obamacare has caused employers to cut back hours and jobs. Nevertheless, the resilience of American businesses and workers has slowly pulled us out of the 2008 crisis and recession, which is overwhelming the effect of Obamacare.
Further, if we look at who received Obamacare coverage, only 4.1 million of those uninsured in September 2013 received health insurance through the poorly functioning exchanges. Unfortunately, 3.6 million workers lost their employer-based benefits and got dumped onto exchanges. Of the 9.7 million newly dependent on Medicaid, 6.5 million were previously uninsured. That is only two thirds of the total. The remaining third comprises a net of 3.2 million people who were previously insured.
Almost all of the 6.1 million had “other” coverage, which RAND says includes, “Medicare, military insurance, and other state policies.” In other words, they just moved from one government program to another, which should not be recognized as progress. However, of the 2.9 million who lost Medicaid coverage, over half – 1.7 million – either received employer-based benefits or bought non-subsidized individual policies. They deserve our congratulations for climbing out of government dependency.
To put the remarkable resurrection of employer-based benefits in context: According to the Bureau of Labor Statistics, the first month of job losses was February 2008. Losses continued through December 2009 and we did not return to unbroken increases in jobs until October 2010. From September 2013 through February 2014, the United States added about 4.4 million jobs. So, if 8.0 million workers received employer-based benefits, it means health benefits are growing much faster than jobs!
The RAND study concludes that, “The ACA has greatly expanded health insurance coverage in the United States…” but this is not really what the data tell us. Instead, we should lament that Obamacare has caused unnecessary disruption and a decline in the quality of coverage. Consider the 3.6 million who were dropped from employer-based benefits into exchanges. Without Obamacare, they would surely have kept their benefits. The same is true for many of the previously uninsured who enrolled in exchanges or fell into Medicaid dependency, whom Obamacare has crowded out of employer-based coverage.
