Unanswered Questions on Single Payer

This month’s Democratic presidential debate will likely see a continued focus on the single-payer health care proposal endorsed by Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts. But for all the general discussion — and pointed controversy — over single payer at prior debates, many unanswered questions remain. The moderators should ask Sanders and Warren about the specific details of their legislation, such as:

►Section 901(A) of the bill states that “no benefits shall be available under Title XVIII of the Social Security Act” — i.e., Medicare. And an analyst with the liberal Urban Institute has said that “you can call (the bill) many things — from ambitious to unrealistic. But please don’t call it Medicare.” Why do you insist on calling your proposal “Medicare for All” when it would bear little resemblance to the Medicare program and, in fact, would abolish it outright?

►You have claimed that single payer will make health care a human right. But the bill itself does not guarantee access to a doctor — it only guarantees that patients will have their care paid for if they can find a doctor or hospital willing to treat them. In fact, in 2005, the Canadian Supreme Court ruled that “access to a waiting list is not access to health care,” because patients in that country’s single-payer system could not access care in a timely fashion. Why are you promising the American people access to care when your bill falls short of that promise?

►The Urban Institute estimated that a similar single-payer plan would raise national health care spending by $719.7 billion a year, because abolishing cost-sharing (e.g., deductibles, copayments, etc.) will increase demand for care. But the People’s Policy Project called Urban’s estimates “ridiculous,” because “there is still a hard limit to just how much health care can be performed because there are only so many doctors.” Which position do you agree with — the Urban Institute’s belief that individuals consuming more “free” health care will cause spending to rise, or the position that spending will not increase because at least some people who demand care will not be able to obtain it?

►Countries like Canada and Great Britain, both of which have single-payer health care systems, permit individuals to purchase private insurance if they wish — and many Canadians and Brits choose to do so. Why would you go beyond Canada, Britain and other countries to make private health insurance “unlawful” — and do you believe taking away individuals’ private insurance can pass constitutional muster with the Supreme Court?

►Four years ago, your Senate colleague Robert Menendez, D-N.J., was indicted for accepting nearly $1 million in gifts and favors from a Florida ophthalmologist. Menendez had tried to help that ophthalmologist — who was eventually convicted on 67 counts of defrauding Medicare — in a billing dispute with federal officials. Given this ethically questionable conduct by one of your own colleagues regarding the Medicare program, why does your legislation include no new provisions fighting fraud or corruption, even as it vastly expands the federal government’s power and scope?

►You have criticized President Donald Trump for his supposed attempts to “sabotage” the exchanges created under President Barack Obama’s health care law. How, then, would you stop a future Republican president from sabotaging a single-payer system when your legislation would vest more authority in the federal government than President Trump has?

Once Warren and Sanders finish answering these questions, the American people will likely recognize that, the senators’ claims to the contrary notwithstanding, single payer doesn’t represent a good answer for our health care system at all.

This post was originally published at USA Today.

Warren’s Prescription the Wrong One

In an October analysis the Urban Institute concluded that a single-payer plan, similar to Sen. Warren’s, which eliminates virtually all patient cost-sharing, would raise national health spending by more than 20%, or $719.7 billion a year. In the researchers’ view, the additional demand stimulated by making health care “free” to consumers would overwhelm any potential savings from paying doctors and hospitals government-dictated rates. This higher demand would also raise the cost of single-payer well beyond Sen. Warren’s estimates, meaning middle-class families would face massive tax increases to pay for this spending.

That Prof. Johnson would cite the Urban Institute to argue that Sen. Warren’s plan would lower health-care costs, while ignoring the fact that the institute itself reached the opposite conclusion, speaks to the cherry-picked nature of the proposal, which has drawn derision from liberals and conservatives alike.

This post was originally published at the Wall Street Journal.

Three Reasons You Won’t Keep Your Doctor Under Single Payer

Over Fourth of July week, liberal activists took solace in the results of a poll that they said demonstrates the popularity of a single-payer health system. The survey showed diminished support for a “‘Medicare for All’ [system] if it diminished the role of private insurers.” However, support rose by nearly ten points if pollsters described single payer as a system that “diminished the role of private insurers but allowed you to keep your preferred doctor and hospital.”

Staff for Sen. Bernie Sanders (I-VT) claimed the survey showed single payer “is wildly popular when you tell people what it would actually do.” That claim misses the mark on several levels. First, most individuals wouldn’t consider a 55 percent approval rating—the level of support for a single-payer plan that allows patients to keep their doctors—as evidence of a “wildly popular,” as opposed to mildly popular, policy.

More fundamentally, though, single payer has precious little to do with keeping one’s doctor. For at least three reasons, many patients will lose access to their preferred physicians and hospitals under a single-payer system.

‘Free Care’ Means People Will Demand More

Second, the Sanders legislation would virtually eliminate medical cost-sharing—deductibles, co-payments, and the like. As a result, individuals who currently have health insurance would use more care once it becomes “free.”

In their analysis of single-payer legislation, both the Rand Corporation and the liberal Urban Institute have estimated that induced demand would result in capacity constraints for health care supply. In other words, so many more people would clamor for “free” care that the system would not have enough doctors or facilities to treat them.

More Work, Less Pay

As I noted last year, single-payer supporters operate under the fanciful premise that doctors and hospitals will perform more procedures for less money. Nearly three-quarters of hospitals already lose money on their Medicare patients—and single payer would extend those Medicare reimbursement rates to all patients nationwide. A study earlier this year in the Journal of the American Medical Association (JAMA) concluded that a single-payer system linked to Medicare payment levels would reduce hospitals’ revenue by $151 billion annually.

More Soul-Crushing Regulations

The federal government has already caused physicians countless hours of paperwork and grief. Thanks to requirements regarding electronic health records introduced in President Obama’s “stimulus,” an emergency room physician makes an average of 4,000 clicks in one shift. Rather than practicing their craft and healing patients, physicians have become button-clicking automatons, forced to respond to Washington’s every whim and demand.

The combination of more work, less pay, and added government intrusion under single payer could cause many physicians to leave the profession. For instance, the electronic records requirements caused my mother’s longtime physician to retire—he didn’t want to spend all his time staring at a computer screen (and who can blame him).

Some physicians could instead eschew the single-payer route, offering their services on a cash basis to wealthy patients who can afford to opt-out of the government system (provided the government will permit them to do so). Still other individuals may make alternative career plans, abandoning medicine even before they begin their formal training.

Here’s hoping that the American people never get an opportunity to discover the fanciful nature of Sanders’s promise that you can keep your doctor and hospital under single payer.

This post was originally published at The Federalist.

Florida Democrats’ Campaign to Abolish Seniors’ Medicare

Full disclosure: I have done paid consulting work for Florida’s current governor, Rick Scott, in his campaign against Democratic Sen. Bill Nelson. And I have provided informal advice to Rep. Ron DeSantis, the Republican nominee for governor. However, neither the Scott nor DeSantis campaigns had any involvement with this article, and my views are—as always—my own.

On Tuesday, Democrats in Florida nominated an unusual candidate for governor, and it has nothing to do with his skin color or background. Tallahassee Mayor Andrew Gillum, who would serve as Florida’s first African-American governor if elected, says on his campaign’s website that the health plan U.S. Sen. Bernie Sanders (I-VT) has offered at the national level “will help lower costs and expand coverage to more Floridians.”

SEC. 901. RELATIONSHIP TO EXISTING FEDERAL HEALTH PROGRAMS.

(a) MEDICARE, MEDICAID, AND STATE CHILDREN’S HEALTH INSURANCE PROGRAM (SCHIP).—

(1) IN GENERAL.—Notwithstanding any other provision of law, subject to paragraphs (2) and (3)—

(A) no benefits shall be available under title XVIII of the Social Security Act for any item or service furnished beginning on or after the effective date of benefits under section 106(a)… [emphasis added].

In case you didn’t know, Title XVIII of the Social Security Act refers to Medicare. Section 901(a)(1)(A) of Sanders’ bill, which he brands as “Medicare-for-all,” would prohibit the Medicare program from paying out any benefits once the single-payer system takes effect. Section 701(d) of his bill would liquidate the Medicare trust funds, transferring “any funds remaining in” them to the single-payer plan.

In other words, Democrats just nominated as a statewide candidate in Florida—a state with the highest population of seniors, and where seniors and near-seniors (i.e., all those over age 50) comprise nearly half of the voting electorate—someone who, notwithstanding Sanders’ claims about his single-payer bill, supports legislation that would abolish Medicare for seniors entirely. Good luck with that.

That’s What ‘Radical Experiment’ Means, Folks

The recent hullabaloo over an estimated budget score of the Sanders plan, which would require tens of trillions—yes, I said trillions—of dollars in tax increases, highlighted only one element of its radical nature. However, as I pointed out in a Wall Street Journal op-ed earlier this year, the Sanders experiment would go far beyond raising taxes, by abolishing traditional Medicare, along with just about every other form of insurance.

Everyone else, which is roughly 300 million people, would lose their current coverage. Traditional Medicare, Medicaid, and the State Children’s Health Insurance Program would all evaporate. Even the Federal Employee Health Benefit Program would disappear.

With those changes in coverage, people could well lose access to their current doctors. As a study earlier this summer noted, medical providers like doctors and hospitals would get paid at much lower reimbursement rates, of 40 percent lower than private insurance. (A liberal blogger claimed earlier this week that, because other payers reimburse at lower levels than private insurers, the average pay cut to a doctor or hospital may total “only” 11-13 percent.)

Doctors and hospitals would also have to provide more health care services to more people, since “free” health care without co-payments will induce more demand for care. If you think doctors will voluntarily work longer hours for even less pay, I’ve got some land I want to sell you.

Déjà vu All Over Again?

In 1983, the British Labour Party wrote an election manifesto that one of its own members of Parliament famously dubbed “the longest suicide note in history.” That plan pledged unilateral nuclear disarmament, higher taxes on the rich, to abolish the House of Lords, and renationalization of multiple industries.

Although Sanders’ bill weighs in at 96 pages in total, opponents of the legislation can sum up its contents much more quickly: “It abolishes Medicare for seniors.” That epithet could prove quite a short suicide note for Gillum—and the Left’s socialist dreams around the country.

This post was originally published at The Federalist.

Study Contradicts Claims of California’s Obamacare “Success”

Liberals have cited California as the prototypical Obamacare success story for years now, but a new study puts that assertion very much in doubt. Five years ago, even before Obamacare’s exchanges went live, The New York Times’ Paul Krugman claimed California would prove that “a program designed to help a lot of people can, strange to say, end up helping a lot of people — especially when government officials actually try to make it work.”

Reporters have chimed in with similar stories about Obamacare’s supposed success in California. During the presidential campaign in 2016, the Los Angeles Times reported that “California is emerging as a clear illustration of what the law can achieve.” The article quoted several insurers saying the state “did it right,” and had created stable insurance markets.

Emergency Rooms Are Getting More, Not Less, Use

The study, conducted by the California Health Care Foundation, examined emergency department usage over the ten years from 2006 to 2016. While the report, perhaps quite deliberately, didn’t highlight this conclusion — it mentioned Obamacare once, and only in passing — the data indicate that emergency department usage since Obamacare has not only not decreased, it has accelerated, rising at a faster rate than in prior years.

One chart tells the tale:

The study indicates that ER usage accelerated in the years immediately following Obamacare’s implementation, just as it shows Medicaid patients comprised a larger share of ER visits. From 2006 through 2016, Medicaid patients nearly doubled as a share of ER visitors, while ER visitors with private insurance and no insurance both declined:

Unfortunately, this chart does not reveal data for the years immediately before and after Obamacare implementation in 2014, making it tougher to draw direct conclusions. However, the 20 percentage point increase in ER visits by Medicaid patients (California calls its Medicaid program “Medi-Cal”) more than outweighs the 9 percentage point decline in self-pay and uninsured patients and the 4 percentage point decline in patients with other forms of coverage.

While private patients’ ER usage held relatively flat over the decade, the nearly 4 million increase in ER visits by Medicaid patients swamped the combined 863,000 fewer visits by self-pay and uninsured patients and patients with other coverage.

To put it bluntly, the raw data from the California study suggest the state has less of a problem with an overall increase in ER visits and much more of a problem with an explosion in Medicaid patient ER visits. That inconvenient truth might explain why the California Health Care Foundation didn’t highlight the impact of Medicaid, or Obamacare’s expansion of it, in the report itself.

California Study Echoes Oregon ‘Experiment’

In 2016, a group of economists released an updated analysis from Oregon, which concluded that ER usage increased, not decreased, by 40 percent for participants in the Medicaid expansion. The increased ER usage persisted for at least two years, making it unlikely that it existed solely due to “pent-up demand” — i.e., individuals using their new insurance coverage to have lingering but previously untreated problems examined.

Contrary to the conventional wisdom that giving patients a more normal source of coverage would decrease ER utilization, the Oregon study found that usage of health care services increased across-the-board, including emergency department visits.

The California study did not reveal whether access problems resulted in the 170 percent increase in ER visits by Medicaid patients. The state has notoriously stingy payment rates for Medicaid providers, which could impede patients from accessing primary care, forcing them to use the emergency room instead.

At minimum, however, the study once again demonstrates how Obamacare has failed to deliver on its promise to lower the cost of health care by providing that care in a more timely fashion and at the most efficient location. The increase in ER usage by Medicaid patients also raises questions about whether an insurance card provides access to actual health care.

Five years ago, I wrote about how Krugman’s claims of California’s Obamacare success echoed The Mamas and the Papas: little more than California Dreamin’. Last week’s study reiterates how liberal claims that the state represents an Obamacare “success story” remain nothing more than a pipe dream.

This post was originally published at The Federalist.

How Single-Payer Supporters Defy Common Sense

The move to enact single-payer health care in the United States always suffered from major math problems. This week, it revived another: Common sense.

On Monday, the Mercatus Center published an analysis of single-payer legislation like that promoted by socialist Sen. Bernie Sanders (I-VT). While conservatives highlighted the estimated $32.6 trillion price tag for the legislation, liberals rejoiced.

Riiiiiigggggggghhhhhhhhhttttt. As the old saying goes, if something sounds too good to be true, it usually is. Given that even single-payer supporters have now admitted that the plan will lead to rationing of health care, the public shouldn’t just walk away from Sanders’ plan—they should run.

National Versus Federal Health Spending

Sanders’ claim arises because of two different terms the Mercatus paper uses. While Mercatus emphasized the way the bill would increase federal health spending, Sanders chose to focus on the study’s estimates about national health spending.

Although it sounds large in absolute terms, the Mercatus paper assumes only a slight drop for health spending in relative terms. It estimates a total of $2.05 trillion in lower national health expenditures over a decade from single-payer. But national health expenditures would total $59.7 trillion over the same time span—meaning that, if Mercatus’ assumptions prove correct, single-payer would reduce national health expenditures by roughly 3.4 percent.

Four Favorable Assumptions Skew the Results

However, to arrive at their estimate that single-payer would reduce overall health spending, the Mercatus paper relies on four highly favorable assumptions. Removing any one of these assumptions could mean that instead of lowering health care spending, single-payer legislation would instead raise it.

First, Mercatus adjusted projected health spending upward, to reflect that single-payer health care would cover all Americans. Because the Sanders plan would also abolish deductibles and co-payments for most procedures, study author Chuck Blahous added an additional factor reflecting induced demand by the currently insured, because patients will see the doctor more when they face no co-payments for doing so.

Second, the Mercatus study assumes that a single-payer plan can successfully use Medicare reimbursement rates. However, the non-partisan Medicare actuary has concluded that those rates already will cause half of hospitals to have overall negative total facility margins by 2040, jeopardizing access to care for seniors.

Expanding these lower payment rates to all patients would jeopardize even more hospitals’ financial solvency. But paying doctors and hospitals market-level reimbursement rates for patients would raise the cost of a single-payer system by $5.4 trillion over ten years—more than wiping away any supposed “savings” from the bill.

Finally, the Mercatus paper “assumes substantial administrative cost savings,” relying on “an aggressive estimate” that replacing private insurance with one single-payer system will lower health spending. Mercatus made such an assumption even though spending on administrative costs increased by nearly $26 billion, or more than 12.3 percent, in 2014, Obamacare’s first year of full implementation.

Likewise, government programs, unlike private insurance, have less incentive to fight fraud, as only the latter face financial ruin from it. The $60 billion problem of fraud in Medicare provides more than enough reason to doubt much administrative savings from a single-payer system.

Apply the Common Sense Test

But put all the technical arguments aside for a moment. As I noted above, whether a single-payer health-care system will reduce overall health expenses rests on a relatively simple question: Will doctors and hospitals agree to provide more care to more patients for the same amount of money?

Whether single-payer will lead to less paperwork for doctors remains an open question. Given the amount of time people spend filing their taxes every year, I have my doubts that a fully government-run system would generate major improvements.

But regardless of whether providers get any paperwork relief from single-payer, the additional patients will come to their doors seeking care, and existing patients will demand more services once government provides them for “free.” Yet doctors and hospitals won’t get paid any more for providing those additional services. The Mercatus study estimates that spending reductions due to the application of Medicare’s price controls to the entire population will all but wipe out the increase in spending from new patient demand.

If Sanders wants to take a “victory lap” for a study arguing that millions of health care workers will receive the same amount of money for doing more work, I have four words for him: Good luck with that.

Health Care Rationing Ahead

I’ll give the last word to, of all things, a “socialist perspective.” One blog post yesterday actually claimed the Mercatus study underestimated the potential savings under single-payer: “[The study] assumes utilization of health services will increase by 11 percent, but aggregate health service utilization is ultimately dependent on the capacity to provide services, meaning utilization could hit a hard limit below the level [it] projects” (emphasis mine).

In other words, spending will fall because so many will demand “free” health care that government will have to ration it. To socialists who yearningly long to exercise such power over their fellow citizens, such rationing sounds like their utopian dream. But therein lies their logic problem, for any American with common sense would disagree.

This post was originally published at The Federalist.

President Obama’s Twofold Dishonesty on Cutting Medicare Benefits

Amidst the debate on the campaign trail, there’s been a lot of heated rhetoric of late about Medicare “benefits” and who’s doing what (or not) to them.  For instance, in a recent speech the President said that “I’ve proposed reforms that will save Medicare money by getting rid of wasteful spending in the health care system.  Reforms that will not touch your Medicare benefits.”

There’s only one problem: That statement is flat-out FALSE.  The President HAS enacted cuts to Medicare benefits – namely, additional means-testing in Obamacare – and proposed even more Medicare benefit cuts.  For instance, in his budget submitted to Congress this spring, the President proposed:

  • Increasing means-tested premiums under Parts B and D by 15%, and freezing the income thresholds at which means testing applies until 25 percent of beneficiaries are subject to such premiums;
  • Increasing the Medicare Part B deductible by $25 in 2017, 2019, and 2021;
  • Introducing a home health co-payment of $100 per episode in cases where an episode lasts five or more visits and is NOT proceeded by a hospital stay; and
  • Imposing a Part B premium surcharge equal to about 15 percent of the average Medigap premium – or about 30 percent of the Part B premium – for seniors with Medigap supplemental insurance that provides first dollar coverage.

The problem is not necessarily the policy proposals for these particular benefit cuts, which many may find meritorious.  The Medicare Payment Advisory Commission (MedPAC) has previously recommended introducing home health co-payments as a way to ensure appropriate utilization.  Congresses controlled by both Republicans and Democrats have enacted some (limited) means-testing in Medicare.  And Medigap reform has been an element of bipartisan proposals to extend Medicare’s solvency and make the program more efficient.

Instead, the fundamental problem is the President’s twofold dishonesty when it comes to cutting Medicare benefits.  First, in saying that he hasn’t proposed cutting Medicare benefits when he has.  Second, and just as importantly, in the way he has proposed cutting those benefits – all the benefit changes the President proposed in his budget would not take effect until 2017, after he leaves office.  Just like with the Cadillac tax – scheduled to take effect in 2018 – or the massive changes to Exchange insurance subsidies that will make health care less affordable after 2019, Barack Obama wants to give away all the government “goodies” while he’s in office – and stick the next President with the bill after he leaves.  That’s not leadership; that’s the antithesis of leadership.

More Uncertainty Regarding Medicaid Cost Estimates

In a post yesterday, we compared and contrasted estimates from the Congressional Budget Office and the Medicare actuary about who might enroll in the new Medicaid expansions in 2014.  It’s also worth examining estimates of per-beneficiary spending by these newly covered individuals, which will depend in large part on whether those newly enrolled in Medicaid will be more or less healthy than the existing Medicaid population, and whether the new enrollees will engage in a burst of initial spending due to pent-up demand for unmet health needs.

In its re-estimate of the health law last week, CBO assumed that “for the average person who does not enroll in Medicaid as a result of the Court’s decision and becomes uninsured, federal spending will decline by roughly an estimated $6,000 in 2022.”  Conversely, the graph below from the Medicare actuary’s report on Medicaid in March shows that the actuary assumes total Medicaid spending per beneficiary on the newly eligible populations will total less than $5,000 in 2020 for adults in the expansion population, and about $2,000 for children:
 
Admittedly, these two sets of figures are not strict “apples-to-apples” comparisons.  CBO’s assumption discusses 2022 federal spending on Medicaid, whereas the Medicare actuary examines 2020 total Medicaid spending (10 percent of which will be borne by states in 2020).  And those who will not enroll due to the Supreme Court ruling may have different health characteristics and costs than the expansion population as a whole.  That said, it appears safe to assume based on these data that CBO presumes higher projected Medicaid costs for the expansion population than does the Medicare actuary.

To sum up, prior to last month’s Supreme Court ruling:

  • CBO assumed at least 9.5 million newly eligible people would enroll in Medicaid; 7.5 million already eligible people would decide to enroll in Medicaid due to the law; and federal Medicaid spending would cost $6,000 in 2022
  • The Medicare actuary assumed at least 21.2 million newly eligible people would enroll in Medicaid; 4.7 million already eligible people would decide to enroll in Medicaid due to the law; and total Medicaid spending (i.e., state and federal) would cost $5,000 per newly-enrolled adult and $2,000 per newly-enrolled child in 2020

We highlight these disparities to show the VAST degree of difference between the two sets of estimates – and therefore the large degree of uncertainty associated with the law’s impact.  If 21.2 million newly eligible people enroll in Medicaid, as the Medicare actuary predicts, the predictions of the Congressional Budget Office – which thinks about half that number will enroll – about the law’s deficit neutrality would likely be shattered.  Likewise, given the chart above, if adults in the expansion population incur expenses as great as adults in the existing Medicaid population, the law will increase the deficit by a significant amount.

The differences above demonstrate that the law’s supposed “deficit reduction” is far from a sure thing.  In fact, given the things that must all fall into place for the law actually to live up to its fiscal hype, many may say that such assertions are highly dubious, and likely to be proven wrong.

Another Illogical Obamacare “Celebration”

Various press reports indicate that the Administration and liberals are “celebrating” two provisions of Obamacare taking effect today – the law’s medical loss ratio rebates, and the mandate forcing religious employers to violate their consciences and provide contraception coverage.  There’s only one catch: These two provisions are inherently contradictory.

The Washington Post this morning notes that the contraception employers will be forced to cover does not come without a cost:

Contraceptives won’t cost patients, but that doesn’t make them free.  Pharmaceutical companies are not handing contraceptives out to doctors offices’ without sending insurance companies a bill, too.  Health plans ultimately end up paying the cost for any increased use of contraceptives.  The [pro-choice] Guttmacher Institute estimated in a 1998 paper that adding contraceptive coverage would cost $21.40 per person per year in extra health insurance spending.

These statements explain why the Administration’s “accommodation” to religious employers – forcing insurers to pay for contraception themselves – was a meaningless shell game.  After all, if the supposedly “greedy” insurance companies thought “free” contraception would actually lower their health costs and raise their profits, why haven’t insurers been giving patients “free” contraception all along?

At the same time the Administration is celebrating medical loss ratio rebates that it claims will lower premiums, the Administration’s new benefit mandates are raising premiums.  It doesn’t make much sense to highlight insurers issuing $1.51 rebate checks if another mandate also taking effect today will cost more than 14 times that amount (i.e., $21.40 per year).

So today’s celebrations by HHS and Congressional Democrats are inherently illogical.  Then again, given what the American people think about Obamacare, practically any celebration of the massive 2700-page measure would be illogical to start with.

Jonathan Gruber’s Incoherent Claptrap on Obamacare and Jobs

Writing in the New Republic, paid Obamacare consultant Jonathan Gruber puts forward a series of arguments about how the law will help jobs and the economy – several of which contradict each other.  First, Gruber says Obamacare will create jobs in the health care sector:

The Affordable Care Act will boost the economy.  By now, most people who follow politics know that the law will result in more than 30 million additional Americans getting health insurance.  But what few realize is that, by expanding insurance coverage, the law will also increase economic activity.  These newly insured individuals will demand more medical care than when they were uninsured.  While it takes many years to train a family physician or nurse practitioner, it doesn’t take much time to train the assistants and technicians (and related support staff) who can fill much of this need.  In many cases, these are precisely the sort of medium-skill jobs that our economy desperately needs—and that the health care sector has already been providing, even during the recession.

Several paragraphs later, he claims the law will reduce health costs:

Of course, the long-term goal of the Affordable Care Act is to reduce spending on health care. And the best projections suggest that it will. Although the law will boost spending initially, the effect is likely to be modest.  The official Medicare Actuary projects that, by 2019, the ACA will raise health spending by 1 percent, or 0.2 percent of GDP; this is less than one-sixth of one year’s growth in national health expenditures.  Over time, however, the multiple initiatives in the ACA will kick in to help “bend the cost curve,” through increasing consumer incentives to shop for low-cost insurance, moving towards prospective payment methodologies that reward value rather than treatment intensity, and assessing which strategies are cost effective for managing illness.

Let’s unpack these claims one by one:

  • The op-ed claims Obamacare will “boost the economy” – the New Republic’s website went so far as to say the article demonstrates “Why Obamacare Can Cure Unemployment.”  But Gruber himself claims the law will lead to only “modest” increases in spending in its first few years, which raises an obvious question: How can “modest” increases in health spending “cure unemployment?”  At minimum, the law will either result in skyrocketing costs or minimal job growth – but Gruber attempts to argue both sides of this equation.
  • Former Speaker Pelosi’s claim at the White House health summit that Obamacare would “create 4 million jobs – 400,000 jobs almost immediately” was based on a Center for American Progress report that claimed the law would create jobs by slowing the growth of health care costs – i.e., by taking away those fast-growing health care jobs Pelosi said made Obamacare a “jobs bill.”  Yet Gruber is now arguing the inverse proposition – that Obamacare will “help” the economy by leading to more hiring for health care jobs, which will RAISE, not lower, overall health care spending.
  • Gruber also claims that CBO said Obamacare’s reduction in the labor force “will be largely voluntary.”  What he didn’t mention is that CBO also said that the law’s “phaseout of the [health insurance subsidies] as income rises will effectively increase marginal tax rates, which will also discourage work.”  In other words, people will “voluntarily” choose to work less – because in some cases, earning an extra $1,000 of income could cause a family to lose thousands of dollars in insurance subsidies.  If Gruber thinks these perverse incentives will somehow boost the economy – or that it’s “voluntary” for a family to keep its income flat for fear of incurring thousands of dollars in effective penalties by working additional hours – some may say he’s spent too much time in the ivory tower.
  • Finally, Gruber admits that “newly insured individuals will demand more medical care than when they were uninsured.”  What he and other Obamacare supporters have failed to acknowledge is that this demand could well “bid up” the cost of health care services – leading to higher medical inflation.  On that count, the non-partisan Medicare actuary agrees about the threat of higher prices after 2014:

In estimating the financial impacts of the PPACA, we assumed that the increased demand for health care services could be met without market disruptions.  In practice, supply constraints might initially interfere with providing the services desired by the additional 34 million insured persons.  Price reactions—that is, providers successfully negotiating higher fees in response to the greater demand—could result in higher total expenditures or in some of this demand being unsatisfied….Either outcome (or a combination of both) should be considered plausible and even probable initially.

As with Secretary Sebelius’ op-ed this morning, some may argue that Gruber’s feeble and inconsistent claims once again demonstrate the need for repeal – because the fact that the law’s supporters have to take both sides of an argument about Obamacare’s impact on jobs and the economy shows they really don’t have an argument at all.