Is Obamacare Working? The Affordable Care Act Five Years Later

Is Obamacare Working? The Affordable Care Act Five Years Later


Good morning Hank, it’s Tuesday- what is this
weird, non-airport background? Anyway, yesterday was the five year anniversary of the signing
of the Affordable Care Act, widely known as Obamacare, which made me wonder if it’s, ya’know,
like, uh… worked. So here’s the summary of what I found. In
the United States in 2009 more of my tax dollars went to healthcare than would if I lived in
Japan, or the United Kingdom, or Australia, and in exchange for all of that money we did
not get the universal health care that people in all of those countries enjoy. Five years later, in 2014, we spent about
the same percentage of our GDP on health care, and we still don’t have universal health care
but we do have less un-universal health care. By the way, I’m going to oversimplify here
a lot. For better information, you should check out “Healthcare Triage”. So here’s how it worked in the halcyon, pre-Obamacare
days of 2009: the government provided insurance to elderly people, through Medicare, and also
to some poor people, through Medicaid. Many other people got insurance through their jobs
or paid for it themselves, but this still left a lot of people out: like there were
44 million people without insurance. This was obviously a problem for those 44
million people, but it was also a problem for the rest of us because we did have a kind
of universal healthcare in the United States: like when uninsured people got sick and went
to the hospital, they did receive care and, if later, they couldn’t pay for that care,
those costs would be absorbed, either by the rest of us paying higher prices for healthcare,
or else by taxes, because the government had to subsidize public hospitals. But it wasn’t really Universal Healthcare,
because you can’t, like, go into an emergency department and get your week’s supply of insulin
if you’re diabetic. So in the US we didn’t, and still don’t, have real universal Healthcare,
we have, like, if-you-get-shot,-we-will-try-to-patch-that-up-for-you universal Healthcare. And this system was astonishingly inefficient.
Like, we spent more than 17% of our total Gross Domestic Product on healthcare. In countries
like Canada and France and Australia and the Netherlands, they spend less than 10% of their
GDP on healthcare, and they get similar, or in many cases better, health outcomes. Also, back in 2009, insurers could deny you
access to healthcare insurance if you had a “pre-existing condition”: a phrase intentionally
so broad that it encompassed, like, everything. For instance, Henry Reich of “Minute Physics”
was once denied insurance because he had the pre-existing condition of tinnitus, or ringing
in his ear. The only way to get around the pre-existing
condition clause was if you worked for a big company, you could get insurance through them.
And that, of course, incentivized people to work for big companies when they might otherwise
be doing different kinds of work, like…I don’t know, making “Minute Physics” videos. So, the Affordable Care Act sought to make
the labor market less bananas; decrease health related bankruptcies, the number one cause
of bankruptcy in the United States; and, ultimately, to insure those 44 million people without
insurance, while, at the same time, over time decreasing the amount of money we spend on
healthcare. It was going to solve the access problem by
creating these healthcare exchanges where private companies could compete for people’s
business, but they couldn’t discriminate based on gender or pre-existing conditions. The law also would expand Medicaid, which
would get insurance to more poor people, and it required companies with more than 50 employees
to provide affordable insurance to their employees, or else pay a gigantic penalty. This would all be paid for, more than paid
for, hopefully, by cost control measures. These range from getting tougher on Medicare
fraud, to incentivizing hospitals to keep elderly patients healthy so they don’t get
readmitted to the hospital. There’s also a new tax on, like, tanning salons,
and an increase in the Medicare payroll tax for income over $250,000 a year. But has it worked? YES – insofar as things are better than before.
And also…NO – insofar as we are nowhere close to a path to sustainable healthcare
spending. So the ACA was phased in slowly, and the real
meat of it didn’t get going until 2014. You’ll recall the roll-out of the healthcare exchanges
in late 2013 was…a complete disaster. The website, healthcare.gov, was plagued with
glitches and really just…didn’t work. Admittedly, buying private insurance in the
US before the Obamacare exchanges was arguably even worse than healthcare.gov. But it was
just terrible. I remember trying to sign up in those early months and it was truly awful.
What has not been widely reported is that, now, it’s really easy. In general, the exchanges now work very well
and more than 12 million Americans, including me, have signed up for insurance through them.
Insurance premiums are going up, on average, more slowly than they did before the exchanges,
and more insurers are participating, which means there will be more competition in the
market. Plus, the law is costing less than expected
because fewer employers than expected have dropped fewer people than expected off their
insurance. And, it doesn’t seem to be negatively affecting the job market. It certainly led to more freedom in the labor
market. For instance, Sarah Green could leave her insurance-providing museum job to start
an art show with PBS Digital. And certainly for people who can get insurance
now who couldn’t before, either because of pre-existing conditions or because they couldn’t
afford without the government subsidies, the ACA is a really big deal. And none of the
collapse of the healthcare system or “death panel” predictions have come to pass. Instead, uninsurance rates in the U.S. have
dropped dramatically, and early signs indicate that at least in some sectors the law is improving
health. By the way, sources for all this stuff in the doobly-doo. On the other hand, many millions of people
still don’t have insurance and under-insurance, where people technically have insurance but
still end up with medical bills they can’t afford is a huge problem. And while the growth of our healthcare costs
has slowed, we still spend over 17 percent of our GDP on healthcare. Most other developed
countries spend far less than that and still have citizens who live longer and healthier
lives than Americans. And before you say that’s because Americans
eat or drink or smoke or whatever more than British people: no, that’s simply not true!
Have you ever met an actual British person? I don’t mean like Jack or Finn or Charlie,
I mean a real one. So yeah, if nothing changes, healthcare costs
are still going to crush us in the long run, because the thing about the ACA is that it’s
not particularly radical. Like, the 12 million people who got insurance through the exchanges,
that’s less than 4% of Americans. For the vast majority of people, very little
has changed, and that means that the underlying problems haven’t really changed. We spend
way too much on healthcare, and we get too little in return. To take that seriously would require radical
change: government interventions like price controls, for instance. Or a single-payer
healthcare system, or a truly free market system where if you show up to the hospital
with a gunshot wound and you can’t pay for treatment, you don’t get treatment. So Hank, the old system definitely wasn’t
working, and the ACA is working, in so far as its job is to get health insurance to people
who don’t have it without disturbing the health insurance ecosystem for most people. But the ACA didn’t really replace an existing
system so much as it grew on top of it. Now the fact that so many insurers are bringing
more plans to the exchanges indicates that probably the ACA will continue to work, unless
the Supreme Court eviscerates it in a few months. But the ACA has not and will not solve the
long-term healthcare spending challenge that we face. Neither, of course, would repealing
the law, if anything the the healthcare spending problem was worse before Obamacare. Rather
than the endless discussions of repeal or defend we should be frank about the choices
before us. As healthcare economist and healthcare triage
host Aaron Carroll told me, trade-offs are messy. You can get reform more easily and
more cleanly, but not necessarily while preserving the private market. You can make healthcare
cheaper, but not without imposing even more regulation. You can insure more people and make it cost
less for everyone, but not without spending more tax dollars. Hank, healthcare policy
experts across the political spectrum seem to acknowledge this complex reality. It’s
our job now to make our politicians acknowledge it too. Again, for more information and lots of other
videos about healthcare, please check out Healthcare Triage. Hank, thanks for reminding me last week about
the many pleasures of being in a crowd, I will see you on Friday.

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