The Health Law That Contiunues To Make the Economy Sick.

ACA-on-Flag-ROHWe’ve been stockpiling a few notes and things on the Affordable Care Act also known as “ObamaCare” and thought this might be a good time to mention a few of them.

First, remember how one of the reasons for passing the ACA was because of emergency room visits by the uninsured? We always thought that there was something missing in that argument that we did not understand. The rational was that when uninsured people go to the emergency room and do not pay for those visits, the costs are passed onto other consumers. Insurance for all, went the argument, would lower the costs to consumers.

Insurance is based on the premise of spreading out costs amongst a large group of people. So whether others were paying in the form of higher costs from the hospital or bearing that same cost in paying for insurance, there is no practical difference. Furthermore, the people that were going to the emergency room for non-emergency care were doing so because they did not have a regular doctor. This was mostly poor people who – the same poor people whose health insurance is fully subsidized by others.

It can be argued that there is no difference between the cost of an emergency room visit to others is the same whether the patient has insurance of subsidized insurance.

But in a totally predicable result, states are seeing more visits to emergency rooms – not fewer.

This is the same thing that happened in Massachusetts, Canada and England. The number of emergency room visits rose with universal health care. The underlying reason seems to be that when minor accidents or health issues arise, instead of getting an over the counter remedy from a drug store, people will visit the emergency room.

A new study published in Science Mag notes the same thing happened in Oregon where the number of emergency room visits has increased – not decreased – as promised in the passage of the ACA.

The New York Times took note of the study as well:

Supporters of President Obama’s health care law had predicted that expanding insurance coverage for the poor would reduce costly emergency room visits because people would go to primary care doctors instead. But a rigorous new experiment in Oregon has raised questions about that assumption, finding that newly insured people actually went to the emergency room a good deal more often.

The study, published in the journal Science, compared thousands of low-income people in the Portland area who were randomly selected in a 2008 lottery to get Medicaid coverage with people who entered the lottery but remained uninsured. Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance.

The pattern was so strong that it held true across most demographic groups, times of day and types of visits, including those for conditions that were treatable in primary care settings.

Where are the savings to people that the ACA was going to provide from the number of unpaid / unfunded emergency room visits? The costs of emergency rooms visits is still being spread out and the number of visits is going up.

An advocacy group for small businesses, the National Federation of Independent Business (NFIB,) has updated their study on the impact of the Health Insurance Tax (HIT.)

WASHINGTON, D.C., May 6, 2014 — NFIB’s Research Foundation has issued the following update to the previous 2013 study on the impact of the Health Insurance Tax (HIT) as a result of the Patient Protection and Affordable Care Act (PPACA):

The Research Foundation’s BSIM (Business Size Impact Module) predicts the rise in cost of employer-sponsored insurance stemming from the HIT will result in a reduction in private sector employment of 152,000 to 286,000 jobs by 2023, with 57 percent of the job losses coming from small businesses.

This will amount to a reduction of U.S. real output (sales) by between $20 billion to $33 billion during the same time frame. A similar study released in 2012 predicted a loss of 146,000 to 262,000 jobs and $19 billion to $35 billion in sales by 2022. (emphasis in original)

(The update can be found here)

Forbes is reporting on a survey conducted by McKinsey and Company on how many people have signed up for healthcare under the ACA, and how many previously uninsured people have been able to obtain insurance.

One of the principal flaws in the coverage of Obamacare’s exchange enrollment numbers to date has been that the press has not made distinctions between those who have “signed up” for Obamacare-based plans, and those who have actually paid for those plans and thereby achieved enrollment in health insurance. A new survey from McKinsey indicates that a large majority of people signing up are now paying for their coverage. This is progress for the health law. But the survey still indicates that three-fourths of enrollees were previously insured.


The upshot of that figure was that of the people shopping for coverage on their own who had actually enrolled in a new plan in 2014, the vast majority had been previously insured. Another way to say that is that for all of the talk about 7-million this and 8-million that, the Obamacare exchanges’ expansion of coverage to the uninsured was far smaller.

Here’s what that means:

Only 22% of Obamacare sign-ups are paid, previously uninsured enrollees

However, the proportion of individuals purchasing ACA plans who had been previously uninsured remained low. In February, McKinsey reported that only 27 percent of those selecting a new 2014 plan were previously uninsured; in April, the proportion was 26 percent.

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Combining that with the payment figures: of the people signing up for new ACA plans in 2014, only 22 percent were previously uninsured individuals who have paid for coverage and therefore enrolled in health insurance. That’s a meaningful improvement from February’s 14 percent figure, but it’s still low.

Combining all of this data: of the 8 million sign-ups on the exchange, we can only be confident that around 1.7 million are previously uninsured and enrolled. We can add another 865,000 or so for those purchasing coverage off the exchange, for a total of 2.6 million previously uninsured individual-market enrollees.

The ACA takes over one third of the economy, hits small and middle businesses hard, increases premiums for most Americans, has higher costs and has little effect on the previously uninsured.

President Obama and his supporters continue to call this law a success. We would call that claim delusional.

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