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Misunderstanding “Obamacare”

There’s much confusion, conflation, and outright nonsense out there about “Obamacare” and the implications and effects thereof, most of it based on a lack of understanding, and a lot of that seemingly willful.

This was brought home in recent conversations with friends; one on the board of a local hospital here in upstate New York, another who is close friends with a brand-new neurosurgeon, a third a child psychiatrist in the South.

The general issue is simple: every problem – great, small; clinical, financial, or administrative; access-, process-, or outcome-based; that involves health insurance, health plans, governmental programs is blamed on Obamacare.

That asteroid coming within a mere 745,000 miles?  Damn Obamacare!

The Ukrainian war? Due to Obamacare!

My kid didn’t get into the elite kindergarten?  Obamacare AGAIN!

Ok, a reality check…

First, while some facilities are shutting their doors, hospitals have been closing for decades, looooong before PPACA was even dreamt of. If anything, the closure rate has declined significantly of late.  That’s because the country was seriously over-bedded, a situation which led to too many inappropriate admissions.  65% occupancy rates are not sustainable and inefficient so hospitals have to either get efficient or close.  Harsh as that is, we just can’t afford them.  Yes, that will hurt some health systems and may well lead to access issues in smaller communities.  And yes, that will lead to lower health care costs and more dollars for education, tax relief, roads and infrastructure.

More to the point, hospitals are in much worse peril in states that have not expanded Medicaid.  

Second, on balance, PPACA has been good for hospitals; many are doing better these days than they were for years.  In large part this is due to higher coverage rates among the employed as well as the expansion of Medicaid in states that weren’t so blinded by misplaced ideology that they refused the federal dollars.

Third, beyond the odd anecdote, there haven’t been any credible reports of increases in waiting times, access difficulty, or lack of care that can be attributed to PPACA.  (notably I was told this was a big problem in Florida, a puzzlement as the Sunshiners have yet to expand Medicaid).

Fourth, cost.  Health insurance premiums have gone up due to health care cost increases, not due to “Obamacare”.  From a Commonwealth Fund analysis of plans with price increases >10% (insurers are required to report reasons for the increase) :

rising cost of doctor visits, hospital stays, surgeries, tests, medications and other types of direct care were responsible for 84% of the premium hikes in the individual market and 78% in the small group market (which typically includes small-company plans and others with only a minor volume discount).

Finally, PPACA’s costs continue to come down, with the latest figures indicating it will cost $139 billion less than the previous CBO estimate.

That’s $139 billion that can be spent on education, job training, infrastructure, tax relief, pre-K…

What does this mean for you?

Don’t just repeat what you hear on talk radio.  It is likely wrong.

10 thoughts on “Misunderstanding “Obamacare””

  1. Actually, I don’t want Florida’s Medicaid, even if they did expand it. I want a real health plan like those who are getting theirs paid for or subsidized, but the unemployed, white-collar professionals were and are being overlooked and lumped into the “low-income” crowd.

    That is the real shame of the ACA.

  2. So many people don’t understand Obamacare, but many people don’t truly understand how their insurance works and what it actually covers. I wish they would start teaching about insurance in schools just so people would have a basic understanding of how insurance works.

  3. The ACA was ill conceived (didn’t address the drivers of medical inflation, took a sledgehammer where a flyswatter would have sufficed to address the uninsured and drafted with barely a paucity of bi-partisan input) and poorly executed (but because of its massive scope and overreach we should ignore or otherwise excuse the bungling?) No doubt some of the criticism reflects problems that the ACA is not addressing. Perhaps that is part of the issue when legislation is passed where virtually none of our representatives even knew what they were voting on.

    1. Jim – thanks for the comment and welcome to MCM.

      I have a somewhat different perspective. Allow me to address your points in order.

      First, medical inflation drivers. A couple of responses – a) the proof of the pudding is in the eating, and so far medical cost trend post-PPACA is much lower than pre-PPACA; b) that’s due to a regulated market competing on the basis of cost and not risk selection; and c) any attempts to control cost would have been slammed as governmental intrusion etc – as we saw with the IPAB (a cost control mechanism if ever there was one) and the nonsense about “death panels.”

      Second, covering the uninsured. PPACA’s coverage of the uninsured is problematic due in part to the myriad exemptions for every group under the sun, plus state decisions to accept Medicaid expansion will keep the “uncovered” population far too numerous. I don’t know what kind of flyswatter would have worked but I’m all eyes if you have one.

      Third, the paucity of bipartisan input. Got to have two to tango, and in this case almost everyone on the GOP side refused to engage. The governmental option was dropped in large part to elicit GOP (and blue dog Dem) support. I’d be remiss if I didn’t note that the original idea behind the mandate (central to PPACA) was from Heritage, Bob Dole, and other Republican notables.

      Fourth, never said we should ignore bungling, and if you’ve been reading MCM for a while you’ll recall my rather brutal treatment of the Administration during that fiasco. Fair is fair.

      Re the criticism, there are many, many problems that PPACA is not addressing, and the authors had their hands tied by prior legislation (MMA 2003 is a good example) – shouldn’t private companies step in and do so?

      1. I must say, this is the reason that I, and likely many like me, enjoy and respect this forum. Unlike other forums/blogs, which focus on speculation and opinions, MCM consistently provides valid and objective points to support the information presented, as well as to address concerns and other points of views provided. This is a prime example, and while I may not necessarily totally agree with either “side”, I do appreciate the information and points presented. Keep up the good work!

  4. Joe,

    The recent CBO estimate also says that 31 million will remain uninsured more than 10 years post implementation and that 10 million will lose there employer based health insurance by 2021 somehow in defiance of the “if you like your current plan you can keep it” edict.

    Also, that $139B; it’s not a “savings”. They’re merely saying the cost of the program will be $139B less than the original estimate. The total cost is still many hundreds of billions of dollars ($571B to be exact).

    Don’t forget, they are also estimating an additional $59B for Medicaid.

    Lastly, the CBO estimate does not even consider the potential impact of King v Burwell. Depending on how this case gets ruled upon this entire CBO estimate might not be worth the paper its written on.


    1. Mike – always good to hear from you; thanks for the comment.

      Re the 31 million who remain uninsured; about 20 percent will not be eligible as they are undocumented workers or haven’t been here long enough to qualify. Of the remaining 25 million, 61% of adults are <138% of the federal poverty line and live in states that haven't expanded Medicaid.

      As a glass-half-full guy, I like to focus on the good news; 92 percent of the non-unauthorised immigrant adult population will be insured in them years. That’s a big deal.

      10 million will be losing their employer coverage, but they will get other coverage via the Exchanges.

      Re the “savings”, PPACA does cost money; alas if we just got rid of Medicare Part D we could pay for it many times over. As that’s not going to happen, methinks reducing the cost is, in fact, a savings – we don’t have to pay as much for it, thus we’ve “saved” the money. If you bought a car and the dealer lowered your payment after a few months by $100, you would be saving that $100 per month.

      Good point re the Medicaid cost, that’s included in the $139 billion.

      Re King v Burwell, a just-released poll indicates 2/3 of Americans want states to start their own exchanges if the SC rules against subsidies in the Federal Exchange.

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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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