ObamaCare: No Surprises

On MSNBC this morning, I heard Pat Toomey, who as a United States Senator represents the reactionary and regressive Club for Growth rather than actual people, say:

ObamaCare is extremely unpopular. No surprise. Employers are dropping coverage, small employers are not hiring people…

It is no surprise that many people don’t like the Affordable Care Act because it is no surprise that people like Pat Toomey and other like-minded Republicans go on television and lie about it constantly. And it’s no surprise that the reason these right-wingers go on television and lie about it is because they don’t want it to work, don’t want it to do what it was designed to do: keep insurance companies from screwing Americans and provide health insurance to those who don’t now have it.

So, with no surprises and with the understanding that the ACA has its problems—what should we expect from an idea largely dreamed up by Republicans?—allow me to address the claims Toomey made this morning one at a time:

1) There is little evidence that “employers are dropping coverage” because of the ACA. In fact, much of the evidence so far goes the other way. Using a Wonkblog post from May, I will summarize the available evidence:

♦ The employer mandate (which has been delayed until 2015) in the ACA only applies to businesses that employ more than 50 workers. Get this: Out of the 5.7 million businesses in the U.S., only 210,000 have more than 50 employees, which means that 96% of businesses aren’t even affected by the employer mandate. Additionally, many of those small businesses that don’t employ more than 50 workers are eligible for tax credits between 35% and 50% of the cost of insurance coverage for their employees, which may cause some of those businesses to begin offering coverage to their workers.

♦ The Massachusetts experiment with health care reform, on which ObamaCare is extensively modeled, shows that rather than dropping health insurance for employees, businesses actually expanded coverage. That’s right. They expanded coverage in Massachusetts even while nationally employers were dropping employee health insurance coverage. Here it is in graph form:

And this expansion happened even though the Massachusetts reforms contained a tiny penalty—$295 per worker—for businesses who dropped insurance coverage. The Affordable Care Act has a substantially higher penalty that ranges from $2,000 to $3,000 for every employee in the company. Again, businesses with fewer than 50 employees are exempt from having to provide health insurance at all.

♦ Wonkblog makes perhaps the most important point of all about employer-provided health insurance by noting that,

…people simply misunderstand why employers offer health-care benefits. They’re not doing it as a favor to employees. And they’re not doing it because anyone is making them…Employers offer health insurance because employees demand it. If you’re an employer who doesn’t offer insurance and your competitors do, you’ll lose out on the most talented workers. An employer who stopped offering health benefits would see his best employees immediately start looking for other jobs.

2) Toomey’s second claim, that “small employers are not hiring people,” is also not supported by the evidence, if by evidence one means employment data. Pat Toomey is not an economist but Mark Zandi is. And in a USA Today article, which was reporting on the growing payrolls among small businesses, the paper included comments from Zandi:

The gains are beginning to shift the terms of the debate over the health care law. Under the law, businesses with 50-plus full-time-equivalent workers must offer insurance to people working 30 hours a week beginning in 2015. That mandate, originally slated for 2014, has not deterred hiring as feared, some economists now say.

As more data come in, the law’s impact can’t be seen in hiring statistics, says Mark Zandi, chief economist of Moody’s Analytics.

“I was expecting to see it. I was looking for it, and it’s not there,” says Zandi, whose firm manages ADP’s surveys of overall private-sector job creation. If the Affordable Care Act “were causing a drop, you would see meaningful slowing.”

So, there is no discernible ObamaCare effect, as of yet, in hiring data. And the USA Today article also noted that,

New research from Moody’s and other economists also challenges the idea that small employers are hiring only part-time workers to avoid falling under the health care law’s mandate to insure full-time workers.

Zandi himself tried to make that same point to the Obama-haters on CNBC recently. He tried to tell those hard-heads that recent employment data don’t show an increase in part-time employment designed to get around the 30-hour-per-week threshold that triggers the requirement to provide insurance coverage. CNBC’s unhinged Rick Santelli told Zandi he didn’t believe the numbers and had already made up his mind that ObamaCare was hurting job growth, and then Santelli called Zandi an “apologist for the policy.” That’s how debates with Obama-haters go these days. Don’t confuse those folks with the facts. They don’t want to hear anything that counters their ideological beliefs.

In any case, none of this is to say that ObamaCare will have no effect on decisions employers make. There is anecdotal evidence aplenty that some businesses will cut back health insurance coverage and cut workers hours below “full time” in order to prove to the world that the Affordable Care Act is not, well, affordable. To what extent that anecdotal evidence represents a significant trend is currently unknown, as left-of-center economists Jared Bernstein and Paul Van de Water admitted in a piece they wrote for Politico last month (“Obamacare isn’t destroying jobs”):

The fact is, it’s too early to know how health reform will ultimately affect the amount of part-time work. But there’s every reason to expect the impact will be small.

Meanwhile, the Obama-haters continue to lie about the Affordable Care Act in some form or another. Pastor Rafael Cruz, Ted’s dad, told a gathering of zealous fundamentalists this summer:

Our lives are under attack. We already saw what is happening with abortion. The same thing is happening at the other end with ObamaCare. ObamaCare is going to destroy the elderly by denying care, by even perhaps denying treatment of people that have catastrophic sicknesses.

Now, that is crazy talk, I’ll grant you. But it is common crazy talk among conservatives. And, sadly, there probably isn’t anything that anyone can say to such people to convince them they have lost touch with reality. But I want to at least note that some people are trying to talk sense to such folks. John Fugelsang, actor, comedian, political commentator, recently challenged critics of ObamaCare, particularly its Jesus-loving critics, this way:

If people don’t like ObamaCare—I respect some of the folks on the left who would have rather seen single-payer—I agree there’s problems with it, the thing is so watered down Dick Cheney could pour it on a guy’s face in Gitmo, but the fact is that a lot of our moralizing friends who try to repeal it don’t understand:

If you’re afraid of the competition that comes from exchanges or cheaper Canadian drugs or a public option, stop calling yourself a capitalist.

And if you don’t care about 45,000 Americans dying every year because they’re not insured, stop calling yourself a patriot.

And if you don’t want to have a part in healing the sick, find a new name for your religion. It’s time to stop calling yourself a Christian.

Here is the entire entertaining segment on MSNBC’s “The Ed Show” on which Fugelsang made those remarks:

Vodpod videos no longer available.

4 Comments

  1. ansonburlingame

     /  September 24, 2013

    Duane,

    Left and right will argue, as left and right, to support or defund the ACA. That is the politics embedded in the debate. But there is another part of the debate, how, fundamentally to pay for health care for all Americans. ACA was a big step towards more government involvement in finding ways to pay for health care and the bill is going to be far higher for “someone” than first envisioned.

    Remember if you can all the “good things”, the goals of ACA. I don’t need to list them all as the left does that all the time. But in the end someone must pay for all those good things. And we still don’t know exactly who that will be or what the total bill, at the individual level, might become (in terms of taxes or private health care premiums).

    The left will claim that employer provided health care insurance will happen simply because employees demand it. True to a degree for sure. But businesses will work even harder to hire fewer employees when that is an option as well. Debate the details all you like, but look at continuing high (relative to other recoveries) and long term unemployment. To suggest that ACA does not have some effect on that statistic simply doesn’t pass the common sense test, in my view.

    As well, the bulk of funding to support expanded insurance benefits is for “everyone” to pay for health insurance, despite whether you “need it or not” at the moment. Many people previously not purchasing such insurance are now expected to buy it, whether they want to do so or not. That is the aspect of government force that many resist now.

    ACA is an attempt to get private insurers to pay for more health care coverage. But private insurers will not do so unless the can still make a profit from selling such insurance. Whether such insurance, provided by private insurers, is paid for by individual policy holders or business is immaterial to such companies in the long term. They will only pay for health care costs when the revenues are sufficient to make such payments, and a profit as well.

    Solution? Government payment for HC costs, like Medicare and Medicaid. But as well government must ultimately bring in enough revenues (taxes) to make such payments as well, with no profit involved. Thus it would appear that overall costs for HC, some $2.5 Trillion per year would in fact be cheaper if paid by government. But just imagine how much taxes would have to go up to do so, pay some magnitude of $ Trillions each year by governmenbt just to fund health care.

    Bottom line, everyone wants the good embedded in ACA but no one knows how to pay for all of it. Is that not a continuing story over the last 50 plus years of calling for government to pay for what used to be private responsibilities but government cannot find the money to do so for all the food, health care, help when unemployed, cost of auto fuel, etc., etc., etc.?

    That is exactly the reason government debt has gone up much faster, 3 times as fast as production growth (real GDP) in my view and we don’t have an end in sight for that issue. The more we the people demand of government, the more it costs for government to provide for that demand. And Americans refuse to pay the needed taxes to meet the demand.

    The almost instinctive grasp for defense money to pay for domestic demands by progressives is ultimately a sham as well. Americans want defense, but again they don’t want to have to pay for it. They blame the military industrial complex for overcharging for defenses. Fine, cut back on such spending to bleed dry the MI complex and what do you get in return? No carrier battle group to support American efforts in Syria, right now, is just a very small expample of what happens, over time, when defenses are pared back.

    Just look at Europe and its collective inability to defend itself over the last 50 years and counting. Now Americans don’t want to foot that bill, either. Talk is much cheaper than assemblying the forces to actually defend something. Germany in two world wars and Russia during a Cold War tested that western resolve and lost, ultimately. Today the Middle East is testing that resolve as well and China is at least “thinking about it”. The costs involved in such geopolitics, when matched up against increasing internal demand for American government funding is stressing the ability of we the people to pay for all that we demand from American government. And thus the grave political divide today.

    Anson

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    • Anson,

      After watching the video posted above, I feel I must tell your story, again, except with a few comments:

      “the bill is going to be far higher for “someone” than first envisioned”—Prove that. Bet you can’t.

      “But in the end someone must pay for all those good things.” —Which is why the ACA has funding mechanisms built into it.

      “To suggest that ACA does not have some effect on that statistic simply doesn’t pass the common sense test, in my view.”—It might not pass your common sense test, but if you don’t mind, I would like some other tests to confirm what you claim. Right now, the sequester is killing more jobs than ObamaCare could ever dream of killing.

      “Many people previously not purchasing such insurance are now expected to buy it, whether they want to do so or not. That is the aspect of government force that many resist now.”—Yes, people resist government force. And I hope one of the insurance-resisters never run into your car when you’re on the road.

      “Thus it would appear that overall costs for HC, some $2.5 Trillion per year would in fact be cheaper if paid by government.” —A nice argument for socialized medicine. Thanks. I’m with ya.

      “Bottom line, everyone wants the good embedded in ACA but no one knows how to pay for all of it.”—Yes, we do know how to pay for it. It’s right there in the law. We just had a presidential campaign about the issue (remember how Obama was stealing $750 billion from Medicare?).

      “And Americans refuse to pay the needed taxes to meet the demand.”—Yes, especially Republican Americans.

      Duane

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    • Anson,

      You make some good points. But to be better informed about the ACA see http://www.politifact.com/truth-o-meter/article/2013/sep/24/top-16-myths-about-health-care-law/ The article just came out a couple of days ago, so it’s mostly current.

      As to how to pay for it, well we’ve been over that many times. However, I would like to know if there is a study somewhere that shows how much improvement there could be in the economy with a citizenry that’s in good health as opposed to the impact on the economy when its people are without adequate health care.

      Herb

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