How Obamacare Hurts Its Beneficiaries: Two Vignettes
This week, the mainstream media ran two stories about two Obamacare “beneficiaries” who were actually victims.
First, a woman whose husband is already extremely sick, and was subject to the risk of being unable to buy health insurance in the individual market if he lost his employer-based benefits. That was a legitimate problem before Obamacare. NCPA’s proposed solution is health-status insurance, or “insurance against becoming uninsurable”, a type of re-insurance. Obamacare’s solution is a federally regulated health-insurance bureaucracy:
The transition to Obamacare ― at least for a 59-year-old man and a 56-year-old woman in south Orange County ― wouldn’t be quite that bad. But it would be, in three big ways, far rougher and more frustrating than I’d ever dreamed.
- Obamacare brought us new health insurance options, but cost us our more affordable plans.
- We learned patients, but we couldn’t keep our doctors.
- The Affordable Care Act saved us money this year, but it didn’t alleviate our concerns about obtaining affordable medical care.
Second, a woman explaining how Medicaid, expanded by Obamacare, “forces families like mine to stay poor“. Her pregnant sister-in-law suffered a tragic car accident, and fell into the social-safety net:
After the birth, Marcella would have been able to join the university’s student health plan. The baby would be covered by the Children’s Health Insurance Program, the federal-state plan for lower-income children. Marcella and Dave thought they were all set. And then, with the accident, they fell down the social assistance rabbit hole.
At first I thought I would be a great help to Marcella and Dave as they negotiated this web of programs. After all, I’d been teaching and writing about social policy for years, first at Harvard and then at MIT. But I was soon humbled by how immensely complicated the programs are on the ground, and shocked by how penurious. The programs that Marcella now needs as a quadriplegic have helped her in many ways, but have also thrust her, my brother, and their young son into poverty, with little hope of escape. Until this accident, I did not realize the depth of the trap.
And this is not just the story of one family hit by tragedy. Millions suffer under such program strictures and limitations. Between ages 25 and 65, two-thirds of Americans will live in a household receiving means-tested benefits, according to sociologists Mark Rank and Thomas Hirschl.
This “poverty trap” is a consequence of very high effective marginal income tax rates, caused by the loss of benefits as household incomes increase, which incentivizes people to keep their incomes low.
Good post, John, but if we want Medicaid to stop making families stay poor, then we have to help those persons who make too much for Medicaid and not enough to get subsidies for the ACA.
A person whose income goes from $11,000 to $18,000 deserves our praise, but let us not pretend that this person can afford private health insurance without subsidies.
In the states which rejected Medicaid expansion, I believe that about 5 million persons were cut off from both Medicaid and the ACA.
Expanding Medicaid to slightly higher incomes takes real money. State legislatures in the West and South (mainly) were pleased as punch to stop both Medicaid and the ACA, so that their taxes would not go up by a few per cent.
Democrats are often clueless, but the Republican base seems to me composed of greedy geezers and closet racists. (and not always in the closet)
Prove me wrong, I would not mind that.
Thank you. I cannot prove you wrong in that I agree that many people cannot afford health insurance. Even if it was completely deregulated, the cost would be too high for some people.
Nevertheless, any subsidy should not encourage people to stay poor, like Medicaid does.
I apologize for the slur on Republicans. Now there was a migration of Southern racists into the Repub party in the South after LBJ signed the Civil Rights bill. Strom
Thurmond led the way.
But that is not the entire party, so I correct myself.
However, it still makes me mad how the working poor are just ignored in the states which did not expand Medicaid and also tried to sandbag the ACA. (yes, the governor of Georgia publicly bragged that he would do all that he could to slow down implementation.)
The problem with expanding Medicaid for another million or so beneficiaries per state is that, at first, Obamacare picks up the first three years of benefit costs for expansion. But in 2017 states begin to shoulder a larger and larger share of these benefit costs, maxing out at 10 percent by 2020. This would have cost Texas $27 billion more over ten years and added 2 million more enrollees to already burgeoning roles of Mediciad to be paid with money which most states don’t have to burn. The faux Obamacare Mediciad expansion is like a drug dealer who gets you hooked (in this case on easy federal money) and then walks away after you’ve become addicted. That’s no way to run a government – but as our commander in chief is an admitted habitual illicit drug user in his formative younger years maybe that’s the business model he knows best. Ok, ok – low blow but I call a spade a spade.
Joe, the total GDP of the state of Texas is probably in the trillions.
If that is so, then an extra $2.7 billion a year for more Medicaid is a flyspeck on the budget.
I believe that Texas does not have a state income tax. If this extra outlay of $2.7 billion a year was to be financed with a new tax, I suspect the cost would be well under $200 a year for most taxpayers.
The new recipients of Medicaid under the ACA expansion are primarily the working poor –waiters, dishwashers, janitors, receptionists, etc.
The upper middle class in Texas derives clear benefits every day from the low wages that these people earn. Forcing these wealthier taxpayers to fork over an additional $200 a year to help the people who wait on them does not bother me.
Thank you. Then, I suppose we can ask you to explain why people of all income levels move to Texas from states with higher taxes and broader Medicaid eligibility.
The answer for middle-income and higher-income households is obvious. But the working poor? Greater job opportunities trump Medicaid dependency.
What makes health care policy so hard is that, in general, there are very few substitute or second hand goods. Millions of Americans make do every day with old houses, used cars, even used clothes from Goodwill.
But there is no discount brain surgery or used drug. I like the term Cadillac effect. If every driver had to have a new car that met every environmental and repair standard, we would have a driving crisis no different than our ongoing health care crisis for the working poor.
This Cadillac effect is why I have always been skeptical that free market competition alone will make all parts of health care affordable to all. I think the best we can do is a combination of free markets for many drugs and office procedures, and some type of subsidy for complex operations and long hospital stays.
Personally I would try to set up Medicare as the payer of last resort for hospital care. In our system, the hospital really needs to get paid on every patient. (how much they get paid is worth debating a lot.) How we pay for this small enhancement to Medicare is a difficult but solvable question.
Eh?
We have written a lot on our blog about medical tourism and “reference pricing” for hospital procedures in the U.S. (There is now evidence that reference pricing for labs also cuts costs.)
Pharmacy-benefit managers (PBMs) have methods of encouraging patients to use lower-priced drugs. Now that there are handful of new Hep C drugs, and ExpressScripts has made a deal with the newest entrant, Gilead will likely lose pricing power over Harvoni and Sovaldi.
And these are markets where insurers are still controlling access. When customers participate in price formation directly, competition evolves like in other markets.