The Economic Havoc and Failures That ObamaCare Hath Wrought

The Hippocratic oath of healthcare providers is, “first, do no harm.” One oft-discussed triple aim of healthcare public policy is to promulgate policies that will simultaneously improve access to care, improve the quality of care, and decrease costs. As data and outcomes continue to roll in on the impact of the Affordable Care Act, affectionately known colloquially as ObamaCare, it becomes increasingly evident (although in the mind of a limited government minded person, entirely predictable) that the results indicate a slow-rolling tragicomedy of colossal compounding errors and failures that do significant harm as well as fail to improve access, cost, or quality of care. Of course, the ever-present refrain of the “experts” in the field will call for ever more tweaks and adjustments as the needed fix. But before we trust the painter that tells us we need to tear our house down and rebuild it because of his lamentable paint-job, let’s pause and review the growing list of failures and unintended consequences of the government’s massive new intervention in 1/5th of the U.S. economy.  I say “new” because the government involvement in health care was already significant. Those who indicate that ObamaCare was to address free market failures fail to miss the point that for decades, healthcare in America has been far from a free market. That is a topic for a future post, perhaps.

  • The initial launch debacle of the Federal Health Insurance Exchange continues to serve as an albatross and a clear indication of government mismanagement. This failure is not relegated to the federal exchange alone. The state exchanges are also challenged with enrollment and cost containment.
  • Continued disappointing enrollment numbers point to unrealistic expectations and a rebuke that the individual mandate and tax penalties would force people into the insurance market: less than 50% of  projected enrollees have acquired health insurance through heavily subsidized health insurance exchanges, or 10 million enrollees out of a projected 21 million. Recall that the key mechanism underpinning the financial viability of ObamaCare was that a flood of young and healthy entrants would subsidize insurance coverage for the older and more infirm. This was intended to offset the insurance problem of adverse selection, in which those that typically buy insurance are those most in need of it and those that will use it most and thus push losses on insurance companies. What is happening in practice is that the young and healthy that this entire house of cards was predicated on aren’t buying and are making decisions to simply pay the tax penalty that is the stick part of ObamaCare.
  • As a direct result of the above, health insurers are rapidly increasing premiums – in most states insurers are requesting premium hikes in the double digits. Keep in mind that this is after ObamaCare significantly altered the landscape of policies that could be offered and many people lost their plans that they enjoyed as ObamaCare enforced certain standards of coverage that allowed the Administration to pursue some of their progressive dreams of covering items such as contraceptives. ObamaCare was promoted partially on the promise of cost containment. This clearly is being undermined in the insurance market.
  • One method that insurance companies are using to constrain costs is to eliminate providers from their networks and to squeeze and negotiate with those that remain, as well as to focus on dealing with large and monolithic health systems. It remains to be seen whether this force will counter the impact of increasing cost failures of this massive intervention, but it will most certainly reduce consumer access and choice.
  • Much of the ballyhooed health insurance cooperatives, which were a progressive compromise and alternative to their ultimate dream of a single-payer and publicly funded health system, are failing miserably. To quote the linked Wall Street Journal article linked above, “Ten of the 23 innovative health-insurance plans known as co-ops—established with $2.4 billion in ObamaCare loans—will be out of business by the end of 2015 because of weak balance sheets.”
  • Decreased choice and competition through the fueling of mergers in both the insurance and healthcare provider space will result in ever more costs passed on to the end consumers as well as a reduction in choice. The consolidation of health systems was in fact a goal of ObamaCare through the form of incentives to create Accountable Care Organizations. The hope was that these scaled and expansive organizations that gobble up not only large hospitals but also physician networks and outpatient clinics would create efficiency and the ability to coordinate care across the continuum. Consider me greatly skeptical that the consolidation of major insurers down to three main merged players and the ongoing consolidation of health systems, fueled greatly by ObamaCare, will result in any hoped for cost savings being miraculously and generously passed down to consumers. These forces will negatively impact both the cost and the access axes of the triple aim I allude to above.

There are many other failures that I could address, such as the failure of the federal government to coerce most states into expanding Medicaid and building state exchanges, but those addressed here are some of the most pernicious and those that clearly point out a direct counter to what the entire Affordable Care Act was ostensibly designed to solve, but only served to exacerbate the challenges in an already hyper-regulated market.


2 thoughts on “The Economic Havoc and Failures That ObamaCare Hath Wrought

  1. Pingback: A Faustian bargain is still a deal with the devil | The Gymnasium

  2. Pingback: “Are provider-led health care networks too big to fail?” – The Gymnasium

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