This is the fourth part of my Chait v. Moore series concerning Jonathan Chait’s article, “Guy Who Gets Paid to Say Obamacare Doesn’t Work Can’t Find a Single True Fact to Support His Case,” Jonathan Chait, NEW YORK MAGAZINE 2/18/15, http://nymag.com/daily/intelligencer/2015/02/obamacare-hater-cant-find-single-true-fact.html, (Chait), and Stephen Moore’s article, “Affordable care that isn’t affordable: Despite the President’s promises, health care costs are going up,” Stephen Moore, THE WASHINGTON TIMES, 2/15/15, http://www.washingtontimes.com/news/2015/feb/15/stephen-moore-affordable-care-act-isnt-affordable/, (Moore).
In Part I we determined that based on the CBO’s information and lack of information that the “all of the act’s budgetary effects” could not be determined, Congressional Budget Office’s January of 2015, “Updated Estimates of the Insurance Coverage Provisions of the Affordable Care Act,” http://www.cbo.gov/sites/default/files/cbofiles/attachments/49892-breakout-AppendixB.pdf, page 1.
In Part II, we saw that both Stephen Moore and Jonathan Chait mislead consumers by honing in on specific pieces of information that are accurately reported but are used to draw conclusions that they cannot prove, specifically, overall spending for Obamacare. We also get to the point that what the CBO does forecast is how spending is going based on its prior guesses to what they’ve determined to be happening so far that the CBO then uses for projections about Obamacare spending for the items it reports on.
In Part III, breaking down the CBO’s report we found that although federal spending on the specific coverage-only provisions is projected to go down for the next years, there are significant miscalculations the CBO made that it has adjusted in its 2015 projection report, Congressional Budget Office, 1/15/15, “Updated Estimates of the Insurance Coverage Provisions of the Affordable Care Act.” These adjustments indicate that we can rely on some projections but not all that have come out of the CBO and that the REASONS the CBO provides for some of its adjustments that raise a RED FLAG regarding Obamacare now and moving forward.
That brings us to the issue addressed currently: The last Happy Graph, Healthcare Costs Per Capita: Part IV of, “Obamacare and Healthcare SPENDING, Chait v. Moore Part IV.”
In his article, Stephen Moore refers to “This stampede of rising health costs…” (Moore) and that gets Jonathan Chait off and running on his next lecture regarding the convention of what health costs are defined as versus what federal spending is. Health care costs Chait explains are “how much we pay for our treatments (which happens to be much more than what people in other countries pay),” (Chait) Federal spending on healthcare are the overall costs (which we know cannot be determined) that INCLUDE health care costs, what the federal government spends on outlays for health care treatments for individuals.
FIRST: Scolding Moore in this context is little more than an effort by Jonathan Chait to discredit Stephen Moore. Health care costs are a part of federal spending to the extent that the federal government has OUTLAYS for the costs of treatments for individuals. These costs for treatments as Chait notes are much higher in the US than other countries.
BUT CHAIT also misleads. Chait includes a happy graph after stating that “…Obamacare would try to tame the long-term trend toward health-care inflation. That is not only happening, it is happening in a far more dramatic way than even the most optimistic advocates predicted,” (Chait). It turns out that Mr. Chait credits Obamacare with doing more than the government dare take credit for in its own publications.
The PRICE of different medical services has NOT gone down. Consider the 8/31/2014 article, “Surgery Prices Surge With Innovation and Consolidation Under Obamacare,” by Bill Briggs, NBC News, http://www.nbcnews.com/health/health-care/surgery-prices-surge-innovation-consolidation-under-obamacare-n191901, that reports that according to Dr. Jeffrey J. Rice, Chief Executive Officer of Healthcare Bluebook, based in Brentwood, Tennessee, that “Overall, health care inflation has averaged about four percent per year during the past five years.”
Yet, according to Chait’s happy graph, the INCREASE in per capita healthcare costs, the outlay for medical services paid for by the federal government has slowed down. So, if healthcare PRICES, the cost of specific treatments is going up, WHY is there a slowdown in how much healthcare costs are going up for the federal government?
SECOND: Does Jonathan Chait know more than the federal government? Jonathan Chait attributes the graph results of slower growth in real per capita national health expenditures to Obamacare successfully “bending the curve,” and “[taming] the long-term trend toward health-care inflation,” (Chait).
Chait’s optimistic interpretation goes further than even the White House. All reliable sources (including the White House and CMS) attribute at least SOME of the slowdown to sequestration (see for example, http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2014-Press-releases-items/2014-12-03-2.html, “Press release: National Health Expenditures continued slow growth in 2013,” 12/3/2014. Naturally, since most liberals were against sequestration, this was omitted by Mr. Chait.
As consumers we know that payers save money when consumers can’t afford to actually use their health insurance because they’re nervous about paying their share of those costs in the form of out-of-pocket expenses including deductibles, copayments and coinsurance. The White House confirms this.
In a White House best-case-scenario release called, “Recent Trends in Health Care Costs, Their Impact on the Economy, and the Role of the Affordable Care Act,” http://www.whitehouse.gov/sites/default/files/docs/erp_2014_chapter_4.pdf (cited here as White House), the government explains that government savings reflect the fact that “[T]he 2007-09 recession and its aftermath have likely played some role in the recent slowdown in health costs, and this portion of the slowdown is likely to fade…” (White House, page 2). (This is utilization, if you don’t go to the doctor neither you nor the payer, in this case the government pays anything to a doctor).
Unlike Jonathan Chait, the government is uncertain about the full impact of the recession and people’s choices not to utilize healthcare services. The government notes that the full impact of the recession is unknown when it comes to government savings, “…the slowdown is not yet fully understood…” (White House, page 2).
Unlike Jonathan Chait, the White House acknowledges that other influences are helping the Obamacare numbers regarding growth in per capita health expenditures look good in terms of being slower than they have been in a long time. “While various non-recession factors unrelated to the ACA appear to be contributing to the recent slow growth in spending—including a long-term decline in the development of new prescription drugs and a long-term increase in cost-sharing in employer sponsored plans—the ACA is also playing a meaningful role,” (White House, pages 2-3). Fewer new drugs and more cost-sharing in employer-sponsored plans meaning that for 48% of the population estimated to have employer-sponsored plans are paying higher out-of-pocket costs are also contributing to slower growth in expenditures.
When it comes to the “ACA…role,” the government itself isn’t sure whether the ACA has anything to do with the slowdown in the increase in outlays per individual. The White House report indicates that incentives paid to providers “APPEAR [emphasis added] to be beginning to bear fruit,” such as incentives for reducing hospital readmissions and increased health care provider participation in payment models designed to promote high-quality, integrated care. (White House, page 3).
Regarding the ACA role the White House reflects even more uncertainty about what the ACA’s “role” might be discussing results that SUGGEST that Obamacare “MAY GENERATE SPILLOVER BENEFITS,” [caps added] (White House, page 3).
If Jonathan Chait is interested about what the Congressional Budget Office actually states on its Health Care page for January 2015, it says, “Spending on federal health care programs is growing rapidly, driven by both rising enrollment—stemming from the aging of the population and expansions of federal programs—AND RISING HEALTH CARE SPENDING PER ENROLLEE,” [caps added], https://www.cbo.gov/topics/health-care, “Insurance Coverage Provisions of the Affordable Care Act—CBO’s January 2015 Baseline.”
Third: Mr. Chait addresses Mr. Moore’s assertion that “…employers are also dropping their health coverage and dumping employees and their families on Medicaid and the Obamacare exchanges,” (Moore). Mr. Chait argues that “Obamacare has not caused employers to drop coverage,” (Chait).
But Mr. Chait’s one-liner doesn’t address the CBO 1/15/15 projections about the uninsured population which states: “In 2018 and later years, between 24 million and 25 million people are projected to have coverage through the exchanges, and 14 million to 16 million more, on net, are projected to have coverage through Medicaid and CHIP than would have had it in the absence of the ACA. Partly offsetting those increases, however, are projected net decreases of 9 million to 10 million in the number of people with employment-based coverage,” (CBO, 1/15/15, page 4). (Emphasis added).
While the CBO does not credit the ACA with the projection of net decreases of 9 to 10 million with employment-based coverage, it certainly indicates at least a correlation if not causation.
SUMMARY: The federal outlay of money for Obamacare is significant to consumers but the way those outlays are considered by the government they cannot be fully sorted out. What can be sorted out are calculations about the specific coverage outlays of money associated with the ACA that the federal government is making.
Within that narrow consideration are Congressional Budget Office projections from year-to-year about how we’re doing with those specific coverage only outlays of money. For Medicaid those costs are higher than were projected by the CBO. For premium tax credits and cost-sharing money, the outlays have been lower primarily because fewer people are enrolling than the CBO anticipated and because the individuals who are enrolling are choosing cheaper bronze plans more often than the CBO anticipated which means that we’ll see a larger number of people who risk financial devastation in the face of illness because a larger number of people will have less financial protection under the cheaper plans.
Finally, in the face of rising medical PRICES for services, payers have seen a slower rise in the amount of money they’re paying out for health costs per capita, the per person amount of money they’ve spent on medical treatments attributed to sequestration, lower utilization because of the recession and higher out-of-pocket amounts that consumers must pay. Further, the data APPEAR to indicate that ACA provisions incentivizing structural changes could be having a beneficial effect on healthcare costs.
CONCLUSION: As consumers we are concerned with the ACA's fiscal performance because in addition to government strategies that are already in place to limit government spending as explained by the CBO,"...if total exchange subsidies exceed a certain threshold in any year after 2017-- a condition that CBO and JCT expect to be satisfied in some years--people will be required to pay a larger share of premiums..." (CBO, 1/15/15, page 3), there will undoubtedly be other government adjustments to curb government expense.
We should be concerned that newly enrolled and therefore more expensive populations of Medicaid enrollees were underestimated and that the costs of Medicaid were also underestimated. But as the issue with premium tax credits and cost-sharing subsidies indicate, we must also be concerned when meeting or beating fiscal targets is primarily achieved through consumer UN-FRIENDLY conditions such as more consumers than the CBO thought would who are purchasing less coverage (bronze instead of silver plans)to try to save money on premiums. We should also be concerned when government savings in costs are attributed to consumers using their healthcare less often because they're worried about finances, utilization and higher amounts of money demanded from consumers in terms of out-of-pocket expenditures, both of which are currently true.
