Health Care Odds & Ends: Why The ObamaCare Numbers Matter

1. Costs Versus Benefits.  If you’ve read this blog in the last week or so, you’ve seen a lot of numbers about how many uninsured have gained coverage on the ObamaCare exchanges.  Are there 3.1 million young adults who’ve gained coverage via their parents plan or only 258,000?  Has ObamaCare really reduced the number of uninsured by 5.4 million or is the real number closer to 3 million? And so on.

OddsEndsThis matters because the benefits of this law—reducing the number of uninsured—have to be weighed against the costs.  If the number of uninsured has declined precipitously, then the costs are easier to justify.  Thus far, the benefits are falling far short of what the Obama Administration has promised.  The Administration touted the number from the Congressional Budget Office (CBO) that ObamaCare would reduce the number of uninsured by 13 million in 2014—6 million on the exchanges, 7 million on Medicaid.  It is highly unlikely that goal will be reached.

The costs, however, have been quite steep: loss of freedom; higher taxes, even for some in the middle class; at least 5 millionpeople with insurance on the individual market who received cancellation notices; many of those people losing their insurance and now payinghigher premiums for new insurance; patients having difficulty finding exchange plans that cover their doctors; and, of course, the “horror stories.”

Then there are the costs yet to come.  We don’t yet know how many people have lost their small-group plans, although we do know it is happening.  The effect of the employer mandate is as of yet unknown since it doesn’t take effect until January 2015.  But Jed Graham of Investor’s Business Daily counts at least 401 employers who are looking at reducing worker hours in response to the mandate.  He’s also found that some lower-wage workers may already be seeing a reduction on their hours.  Finally, there is the CBO analysis that the incentives in ObamaCare will encourage employees to work fewer hours which would equal 2.5 million jobs by 2014.

Ultimately, we are enduring a great deal of costs for relatively small benefits.  If this trend continues, at some point one has to admit that ObamaCare has not been worth it.

Shoppingcarts2. More Bad Numbers For The Exchanges.  The New York Timesreports a study from Express Scripts that compares pharmaceutical use in the first two months on the exchanges to such use in employer-based plans.  The article notes that while exchanges enrollees appear to be filling prescriptions at about the same rate as those with employer-based plans, the pharmaceuticals exchange enrollees purchase tend to be more expensive:

People who signed up early for insurance through the new marketplaces were more likely to be prescribed drugs to treat pain, depression and H.I.V. and were less likely to need contraceptives, according to a new study that provides a much-anticipated look at the population that signed up for coverage under the new health care law.

The health of those who enrolled in new coverage is being closely watched because many observers have questioned whether the new marketplaces would attract a large share of sick people, which could lead to higher premiums and ultimately doom the new law.

The study, to be released Wednesday by the major pharmacy-benefits manager Express Scripts, suggests that early enrollees face more serious health problems and are older than those covered by their employers. The study also showed a higher use of specialty drugs, which are often used to treat diseases like cancer and rheumatoid arthritis; the use of such drugs could hint at more costly medical problems.

This appears to be bad news for the ObamaCare exchanges.  If enrollees are much sicker than what is optimal for a risk pool, then insurance prices will rise and its off to races on the death spiral.  Nevertheless, a piece on the same subject by the Kaiser Family Foundation and the Daily Beast notes:

Experts caution that the findings are limited to two months’ data and don’t reflect the surge in enrollment which occurred in March and April….

“We all expected that the people who signed up by January and February would be a lot sicker than anyone else,” said Robert Lazsewski, a consultant to the insurance industry.

The consensus among insurers, he said, is that “it will be a year before we know what we’ve got.”

Thus, this is only the first hint that the exchanges are in trouble.  We’ll need a lot more data before any definitive conclusions on the health of the exchange risk pools can be drawn.

3. About That RAND Study.  Recall that RAND study that said close to 9 million people have recently gained coverage?  Well, we are finally getting a look at it, and it turns out the increase doesn’t come primarily from the exchanges or Medicaid, but from an over 8 million increase in the number of people who get employer-based insurance.  In fact, when you compare the gains from the exchanges and Medicaid with the losses in the individual market and the military and federal employee market, the net increase in the insurance is only about 1.1 million:

For more, see Avik Roy.



The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.