On balance, there is little reason to think that Obamacare has increased the number of people with private coverage at all.
Here’s the good news. Only 1 percent of Americans are (1) lawful U.S. residents, (2) uninsured and (3) lack access to subsidized health insurance. That fact comes from health economist Brian Blase, based on a recent Congressional Budget Office report.
Currently, 24.3 million individuals in the United States are uninsured. But aside from those who are here illegally, virtually everyone else is eligible for enrollment in Medicaid, Medicare or in private plans such as those offered in the Obamacare exchanges or by employers.
Medicaid enrollment is free, Obamacare insurance is heavily subsidized and almost all employer-provided insurance is required to be “affordable.” So arguably, we have achieved “universal coverage,” or something very close to it.
Here’s the bad news. Almost all of the increase in health insurance coverage under Obamacare has been the result of an expansion of Medicaid. When Obamacare was being debated, its advocates never said they planned to insure the uninsured with Medicaid. But that is what happened.
What is wrong with that? Two things.
First, since Medicaid pays the lowest provider fees, Medicaid enrollees are the last patients doctors want to see. Almost a third of doctors won’t take any new Medicaid patients at all. Second, since eligibility for Medicaid is determined by income, people find they are enrolled and disenrolled frequently over the space of a few years.
Families at the bottom of the income ladder find that as their income goes up and down and as their job opportunities ebb and flow, they bounce back and forth among eligibility for Medicaid, eligibility for subsidized insurance in the Obamacare exchanges, eligibility for employer-provided coverage and sometimes eligibility for none of the above. No continuity of health insurance usually means no continuity of medical care.
Going by the raw numbers, the Congressional Budget Office tells us that the number of people with private insurance has increased by 1.6 million over the last decade. But remember, Obamacare came into being as America was recovering from the Great Recession. So, even without any change in health policy, we would expect that as more people found jobs, more people would have been privately insured. On balance, there is little reason to think that Obamacare has increased the number of people with private coverage at all.
There has been a major change in the kind of private insurance people have, however. An increase in the number of people with coverage purchased in the Obamacare exchanges (where the average government subsidy is about $6,000), has been offset by a decrease in employer-provided coverage (where the average subsidy is $2,170).
Aside from needlessly adding to the federal deficit, what’s wrong with that? Four more things.
First, the typical plan offered in the exchanges pays provider rates that are not much more than what Medicaid pays. As a result, these plans look like Medicaid with a high deductible. Second, the deductibles are really high. In Dallas, Texas, for example, an average-income family of four getting insurance in the exchange pays no premium at all. But if a family member gets sick, the out-of-pocket exposure is $9,100. If two family members get sick the exposure is $18,200. And that’s every year.
At lower levels of income, the children may qualify for Medicaid and the adults may qualify for subsidies that reduce their out-of-pocket costs. But these freebies from government are far from “free.” The benefits phase out quickly as income rises. So, if the family earns an additional $1,000 in wages, they can lose several times that amount through higher health care costs.
A fourth problem is that enrollees in Obamacare exchange plans often lack access to the best doctors and the best hospitals. Our Dallas family, for example, has no access to the city’s Baylor Medical Center or UT Southwestern Medical Center, or MD Anderson Cancer Center in Houston.
Consider these headlines:
Despite the appearance of universal coverage, we are doing a very poor job of providing care to those at the bottom of the income ladder. Careful studies have determined that Medicaid itself is a poor health insurance plan. In the most meticulous study ever done of the matter, researchers discovered that Medicaid in Oregon had no effect on the physical health of enrollees and that after enrollment, emergency room traffic actually increased. A subsequent study found that Medicaid enrollees value their participation in Medicaid as little as 20 cents on the dollar.
It’s not clear that Obamacare’s exchange insurance is that much better. One reason Congress in recent years added on an extra tier of subsidies for higher-income families is that the unsubsidized part of the individual market was in a death spiral. It seems that very few people are willing to pay the market price for what Obamacare has to offer.
All that said, there are pockets of excellence here and there within the safety net.
Parkland Hospital in Dallas delivers almost 13,000 babies every year. It is one of the largest baby delivery centers in the country. Almost all of the mothers are low-income minorities. More than three-fourths are Hispanic, and I suspect that a great many of those are undocumented. This is a group researchers call “at risk.” Yet among those who go through the prenatal program, infant mortality is half what it is for similar populations elsewhere.
The Parkland baby delivery program has been underway for several decades, and I wrote about it in Priceless. It involves extensive pre-natal and post-natal care provided by nurses. Most deliveries are done by midwives, rather than obstetricians.
Although the hospital does not release the figures, I suspect that this nonprofit institution actually makes a “profit” on baby delivery by piecing together various sources of government funding, minimizing the cost of personnel, and avoiding costly complications that lead to infant and maternal death.
Parkland’s baby delivery program is an example of what Harvard professor Regina Herzlinger calls a “focused factory.” These are places where the providers become really good at providing high-quality, efficient care. There would be a lot more Parklands around if we changed the way the health care safety net operates.
Boston University economist Laurence Kotlikoff I and have advocated replacing Medicaid, the Obamacare exchanges, and other safety programs with a system that functions like Medicare Advantage. Risk-adjusted payments would be made to competing organizations. The ones that succeed in producing high-quality, efficient care would be financially rewarded. Those that fail in this regard would be penalized with financial losses.
The first step toward that goal would be for the health policy community to recognize that the achievement of near universal health insurance coverage has not created universal access to high-quality care.
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