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How awful is Obamacare?

A job-killing socialistic government-run abandonment of the free market and abuse of federal power – that’s pretty much on the far end of the “awful” scale.
If that was true, we’d all be up in arms. But it isn’t.
I’m continually puzzled by the level of anger directed at “Obamacare”; listening to some of the more vitriolic detractors you’d think it was single-payer with death panels and mandated reimbursement levels and no privacy protection with care delivered by former gulag employees…
in Gulag facilities…
What “Obamacare” is…is not “government-run” health insurance; the vast majority of newly covered folks will get their care from private insurers, who will negotiate with providers on their own terms, and set their medical management policies themselves.
What Obamacare is not – is a “job-killer”. Recall Massachusetts enacted legislation very similar to PPACA back in 2009.
Overall, employment gains in healthcare Massachusetts outstripped the rest of the country by four points; Mass added 9.5% more health care jobs since passage of reform while the rest of the nation averaged 5.5%.
But the impact wasn’t just on health care job counts. While the rest of the country saw a 2.9% drop in employment since Massachusetts passed reform, Mass’ employment dropped by a mere 0.2%.
While some jobs will likely be lost, the jobs that will be gained will be high-paying, professional ones.
According to the NFIB – no friend of Obamacare, “The employer mandate would boost demand for healthcare goods and services, thereby increasing employment in healthcare-related sectors. [emphasis added] The number of ambulatory healthcare professionals (physicians, dentists, and other healthcare practitioners) needed will increase by 330,000. An additional 327,000 staff will be required to work in hospitals. Some 157,000 more nurses (net of retirements) will be needed to staff doctors’ offices, outpatient clinics, and other provider locations. And payrolls at insurance companies will expand by 76,000 workers.”
(Note this study focused on the original mandate, not the one that exempted employers with fewer than 50 workers – and this would have created 890,000 jobs. (NFIB hasn’t updated their numbers to reflect the lack of mandate for small employers, which may well have reduced the number of jobs lost in retail and services.)
Okay, so we have 330,000 more jobs for docs and dentists, and 157,000 net new openings for nurses. That’s almost half a million new high-paying jobs; these aren’t retail clerks, burger flippers or car wash attendees, these are folks making from $50,000 to $400,000.
That pretty much takes care of the government-run and job-killing issues.
That leaves, let’s see, children are covered till age 26; exclusion of pre-existing conditions won’t be permitted; no lifetime caps on coverage; seniors won’t have to worry about the “donut hole”…
What’s left? What’s really wrong with Obamacare? No fact-free rants please.

8 thoughts on “How awful is Obamacare?”

  1. A recent article that discussed the objections to ACA, termed the criticisms as the “rhetoric of intransigence”.
    The author pointed out that with every major social reform going back into the early 20th century, opponents used all kinds of language to paint the reform as evil, destructive and so on, but none of the horrible things they predicated ever came true.
    In fact, just the opposite happened. Things got better, not worse. And having now gotten my MHA degree (Master’s in Health Administration) and taking an elective on the ACA, the law, while not perfect, is better than what we have currently, and like all legislation can be improved upon.
    Also, I did a paper on the ACA and the end of Work Comp. After perusing the limited industry literature on the subject, I concluded that ACA would not be the end of Work Comp, so those people in the insurance world who opposed the law and still do, should relax because nothing major is going to change.

  2. I believe that PPACA in general has some great potential as you stated in the post.
    However, the Medicaid expansion at the state level will put heavier demand on the state revenue systems and will likely have additional burdens past to the tax payer. In Texas the expansion would likely bridge the gap between children 12-18, but there will be a significant increase in adults.
    With the additional burdens tied directly to the state and not funded at the federal level, the states will have to make decisions on what other programs will suffer and that could have an impact on jobs and infrastructure. For those states that refuse to let any programs go (California), they could start filing for bankruptcy. Who knows what real effect that will have on the economy.

  3. Most of the “newly covered” will be in Medicaid, a government run program. Not in private insurance, according to CBO. Of the 50 million uninsured, 17 million are expected to sign up for the expanded Medicaid programs and another 12 million of them are believed to ALREADY be Medicaid eligible but have never signed up. That’s why the states were fighting the mandate so hard, they couldn’t afford to pay for the 12 million if they show up today. So at least 28 million of the 50 million are going to be Medicaid eligible on 1/1/14 (if not already eligible.) In addition, roughly 9.5 million of the 50 are in the country illegally, and there is no provision in the Act for them to receive any healthcare benefits at all.
    So, of the 40 million uninsured the Act actually can affect, roughly 28 million of them will be Medicaid eligible and 12 million would have to buy private.
    And don’t forget that we don’t have anywhere near the primary care docs to take care of 28 million new patients. Not even close. So they will be in queues if they are slightly sick and in the emergency rooms if they are very sick. Not good.
    The Act certainly has retarded hiring in the non-medical industries pretty severely, especially among businessmen in the key 30-90 employee demographic where the new “employer mandate” will add taxes and/or force them to expand the coverage they offer their employees dramatically.
    And don’t forget, medical hiring is classified by economists as a DRAG on productivity, because most of the money we spend on healthcare (like 80% plus) is spent on humans that will never work again and/or in the last 6 months of their lives. So calling more hiring in the medical/industrial sector “good for the economy” doesn’t really work. Those jobs are simply wealth shifting from other occupations (at lower wages) and concentrating into fewer (higher paying) jobs in the medical economy.
    Now, if other countries start exporting their patients to the U.S. then we can have an honest conversation about medicine being good for the economy. But with our pricing structure, that is very unlikely to happen, we pay our docs too much and charge way too much for care.
    From an economics perspective the most damaging parts of PPACA are the new regulations on business and business investment. These regulations have been in the developmental stages since the Act passed back on 3/23/2010, and are nowhere near finished. That means if I am thinking about a business investment (say a factory to build something) there is considerable uncertainty STILL about what my healthcare costs are going to be 5 years down the road. I STILL don’t know who I have to offer health insurance to in 2014, how rich the plans have to be (will vary state to state it looks like) and how much I have to pay for them. That uncertainty about long term costs is just large enough for me to delay my decision for a few years and keep that capital in my pocket instead of creating jobs with it.
    The Act, and the subsequent legal challenges to it, have created so much uncertainty that it is actually retarding economic growth. The Dems seemed to have over-reached when they put all that stuff in one bill. If they had just expanded Medicaid, no big deal, but PPACA goes SO far beyond that with new rules and regs that touch every sector of our economy that nobody really can model all the effects, even CBO has updated all their disclaimers they issue with their projections to let us all know that the uncertainty is “manifest and could render our estimates obsolete at any time.”

  4. Gibson – thanks for the comment.
    Couple observations.
    1. Your anecdotal comments re hiring plans run counter to the actual data from Massachusetts, where reform does not appear to have impaired hiring – and some maintain it has added stability and thus helped hiring.
    2. I don’t see how PPACA is “at fault” for the uncertainty that you contend is leading business owners to not invest, for several reasons.
    a) this is but one factor in expansion decisions, and there are many others that are much more significant; the global economy being the most important.
    b) health care costs have been going up for decades, at varying rates of increase, and this would be happening without PPACA. Just because PPACA is now the law of the land, you can’t say it is now PPACA’s “fault” that business owners are thinking about health care costs. No business owner will be basing a decision on whether to build a factory solely on what health care insurance requirements will be in 2014; that’s one of many factors, and likely well down the list in terms of significance.
    3. Your statement that “Act certainly has retarded hiring in the non-medical industries pretty severely, especially among businessmen in the key 30-90 employee demographic where the new “employer mandate” will add taxes and/or force them to expand the coverage” has a fatal error; employers with fewer than 50 workers will NOT have to add coverage.
    In addition, your statement isn’t backed up with a citation; if you have one please provide it.
    4. Your contention that hiring in health care isn’t good for the economy is puzzling. The rapid evolution of the delivery system may well improve outcomes and reduce per-patient costs; the research clearly indicates efficient models deliver those results and PPACA is already influencing delivery system changes.
    While it is tempting to blame PPACA for every ill, the point that is lost in this discussion is that without PPACA, our health care financing system would be in an accelerating death spiral; employers would opt out of covering employees, pushing them into an almost completely dysfunctional individual health market and the ranks of the uninsured would inevitably increase.
    Yes, PPACA is cumbersome, fraught with uncertainty, and will inevitably have failures, but the alternative is much worse.
    That gets lost in the conversation.

  5. Joe- your statement that “the alternative is much worse” is fact-free.
    Those on the left would resolutely state that single payer is an alternative that would be much better.
    Those on the right would resolutely state that an array of free-market reforms would be much better.

  6. Jim – thanks for the comment, although you are incorrect on two counts.
    First, I cite what would have happened without PPACA i.e., the continued death spiral of the insurance market. That’s fact.
    Second, the public option was never seriously considered and therefore irrelevant, and the GOP alternative is so ephemeral and sketchy as to be unquantifiable in terms of future impact.

  7. I believe there’s another job-creating aspect that I never hear discussed. Older workers who find themselves unemployed can now start new businesses and become “job creators” confident that they’ll be able to continue their health insurance rather than be forced to take low-paying jobs at Starbucks just for the health care benefits. I’ve actually seen this among my peers, but it’s purely anecdotal. Any data to support this theory?

  8. Older workers who find themselves unemployed and have incomes below $19,000 a year can get Medicaid, That is why they won’t need to go to Starbucks.
    Older workers do create jobs if they have $200K or so to invest. Otherwise they only create jobs for themselves in one-person businesses.
    Joe, you are a fine writer but you make a mistake in using Massachusetts as your test case.
    Massachusetts had only 5% uninsured before they had health reform in 2004. Virtually all employers with more than 5 employees were already providing insurance.
    Whereas in flyover country in the West, South, and in farm states, there are big
    factories that provide very skimpy insurance or none at all. These businesses do face a potential cost crisis under full PPACA.
    Also in places like LA and Texas and Mississippi, just bringing CURRENT eligibles onto Medicaid will hit state budgets with millions of dollars.
    The feds will help cover new Medicaid enrollees for 4-5 years, but there are 12 million legal residents who are kept from Medicaid now by stingy guidelines and imposing procedures.
    These states are mostly run by tax-cutting politicians, so there will be a big conflict.
    As Michael Lind said, if America ended at the Mason Dixon line we would have had national health insurance 40 years ago.
    Bob Hertz, The Health Care Crusade

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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