Secrets in Plain View: Obamacare Is Working
Monday, 03 October 2016 00:00 By Dean Baker, Truthout | Op-Ed
An agent helps clients choose insurance plans during open enrollment for
the Affordable Care Act in San Francisco, November 1, 2015. (Jim Wilson /
The New York Times)
Most people would consider it pretty bad luck if they had three inches of
rain dumped on their city in a 24-hour period. That is, unless they had just
missed being hit by a hurricane. That analogy captures how we should feel
about Obamacare.
There are still tens of millions of people without health insurance. An even
larger number of people have great difficulty covering the deductibles and
co-pays required by their insurers. In many cases, even people with
insurance go without necessary care because they can't afford these
expenses. And we still have jokers like Martin Shkreli and the Mylan EpiPen
crew jacking up prices on life-saving medicines. There are plenty of reasons
to be angry about the current state of our health care system, but like the
city that just missed being nailed by the hurricane, we have to realize that
it could be much worse.
This isn't idle speculation. In 2009, President Obama's first year in
office, the Center for Medicare and Medicaid Services projected that health
care spending would take up 19.3 percent of GDP in 2016. The most recent
projections show health care costing 18.1 percent of GDP this year.
That sounds really nerdy, but the difference between these two projections
amounts to more than $220 billion in savings this year. That comes to $690
per person in savings or $2,750 for an average family of four. This is real
money to most people.
One reason that the slowing in health care costs is not widely recognized is
that most people are not studying the projections. While just about everyone
living in a coastal city will know about the forecast of a hurricane strike,
few people spend their time studying health care cost projections. This
means that when spending slows sharply, as it has in the last seven years,
most people don't recognize the slowdown. They just know that health care
costs more than it used to. This is the case of people getting hit by three
inches of rain and not recognizing that they just missed a hurricane.
The other reason most people may not see the slower cost growth is that they
don't pay for most health care directly. The overwhelming majority of people
in the country have most of their health care paid for by their insurer or
the government. When the insurance companies and the government see savings,
the typical family does not directly feel the benefit in their pocketbook.
However that doesn't mean they don't benefit from these savings. For most of
the last four decades workers were seeing an ever larger share of their
compensation going to cover the cost of their health care insurance. Money
that might have otherwise gone to wage increases went instead to pay for
their health care plan. The opposite has been the case over the last seven
years with the cost of health care and other benefits declining from 13.8
percent of total labor compensation in 2009 to 13.1 percent in 2015.
If spending had continued on its prior path, health care and other benefits
would now account for more than 15 percent of compensation. While not all
employers passed on these savings, on average workers' paychecks are almost
3 percent higher because of the slowing of health care cost growth.
The other big saver is the government. The federal budget deficit would be
almost $200 billion higher in 2016, if health care costs had followed the
path projected before the passage of the Affordable Care Act (ACA).
This is the good news from Obamacare. Of course the even better news is that
the number of uninsured has fallen to a record low. And, we now have clear
evidence that this is leading to improvements in health outcomes. States
that expanded their Medicaid program, as provided for in the ACA, have seen
improvements in health outcomes for low and moderate income people compared
to states that did not.
All of this is important background, because the public has to recognize the
enormous progress that has been made with the ACA so that the huge problems
that remain in our health care system can be fixed. At the moment, most
Democrats are scared to talk about the ACA because their focus groups tell
them it is unpopular. That means the only people talking about the ACA are
Republicans talking about death panels and comparing it to slavery.
We have to reduce the amount that people pay out of pocket, end charges for
many times of preventative screening and introduce a Medicare-style public
option in the health care exchanges. But these and other steps can only take
place if politicians who support the ACA feel comfortable talking about it.
That will only be the case when people recognize the benefits it has
brought.
No one should be satisfied with the health care system as "reformed" by the
ACA. But it is important that they recognize the progress it has brought and
that we can make much more progress by building on its success.
Copyright, Truthout. May not be reprinted without permission.
DEAN BAKER
Dean Baker is a macroeconomist and codirector of the Center for Economic and
Policy Research in Washington, DC. He previously worked as a senior
economist at the Economic Policy Institute and an assistant professor at
Bucknell University. He is a regular Truthout columnist and a member of
Truthout's Board of Advisers.
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Secrets in Plain View: Obamacare Is Working
Monday, 03 October 2016 00:00 By Dean Baker, Truthout | Op-Ed
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. An agent helps clients choose insurance plans during open enrollment
for the Affordable Care Act in San Francisco, November 1, 2015. (Jim Wilson
/ The New York Times)
. Most people would consider it pretty bad luck if they had three
inches of rain dumped on their city in a 24-hour period. That is, unless
they had just missed being hit by a hurricane. That analogy captures how we
should feel about Obamacare.
There are still tens of millions of people without health insurance. An even
larger number of people have great difficulty covering the deductibles and
co-pays required by their insurers. In many cases, even people with
insurance go without necessary care because they can't afford these
expenses. And we still have jokers like Martin Shkreli and the Mylan EpiPen
crew jacking up prices on life-saving medicines. There are plenty of reasons
to be angry about the current state of our health care system, but like the
city that just missed being nailed by the hurricane, we have to realize that
it could be much worse.
This isn't idle speculation. In 2009, President Obama's first year in
office, the Center for Medicare and Medicaid Services projected that health
care spending would take up 19.3 percent of GDP in 2016. The most recent
projections show health care costing 18.1 percent of GDP this year.
That sounds really nerdy, but the difference between these two projections
amounts to more than $220 billion in savings this year. That comes to $690
per person in savings or $2,750 for an average family of four. This is real
money to most people.
One reason that the slowing in health care costs is not widely recognized is
that most people are not studying the projections. While just about everyone
living in a coastal city will know about the forecast of a hurricane strike,
few people spend their time studying health care cost projections. This
means that when spending slows sharply, as it has in the last seven years,
most people don't recognize the slowdown. They just know that health care
costs more than it used to. This is the case of people getting hit by three
inches of rain and not recognizing that they just missed a hurricane.
The other reason most people may not see the slower cost growth is that they
don't pay for most health care directly. The overwhelming majority of people
in the country have most of their health care paid for by their insurer or
the government. When the insurance companies and the government see savings,
the typical family does not directly feel the benefit in their pocketbook.
However that doesn't mean they don't benefit from these savings. For most of
the last four decades workers were seeing an ever larger share of their
compensation going to cover the cost of their health care insurance. Money
that might have otherwise gone to wage increases went instead to pay for
their health care plan. The opposite has been the case over the last seven
years with the cost of health care and other benefits declining from 13.8
percent of total labor compensation in 2009 to 13.1 percent in 2015.
If spending had continued on its prior path, health care and other benefits
would now account for more than 15 percent of compensation. While not all
employers passed on these savings, on average workers' paychecks are almost
3 percent higher because of the slowing of health care cost growth.
The other big saver is the government. The federal budget deficit would be
almost $200 billion higher in 2016, if health care costs had followed the
path projected before the passage of the Affordable Care Act (ACA).
This is the good news from Obamacare. Of course the even better news is that
the number of uninsured has fallen to a record low. And, we now have clear
evidence that this is leading to improvements in health outcomes. States
that expanded their Medicaid program, as provided for in the ACA, have seen
improvements in health outcomes for low and moderate income people compared
to states that did not.
All of this is important background, because the public has to recognize the
enormous progress that has been made with the ACA so that the huge problems
that remain in our health care system can be fixed. At the moment, most
Democrats are scared to talk about the ACA because their focus groups tell
them it is unpopular. That means the only people talking about the ACA are
Republicans talking about death panels and comparing it to slavery.
We have to reduce the amount that people pay out of pocket, end charges for
many times of preventative screening and introduce a Medicare-style public
option in the health care exchanges. But these and other steps can only take
place if politicians who support the ACA feel comfortable talking about it.
That will only be the case when people recognize the benefits it has
brought.
No one should be satisfied with the health care system as "reformed" by the
ACA. But it is important that they recognize the progress it has brought and
that we can make much more progress by building on its success.
Copyright, Truthout. May not be reprinted without permission.
Dean Baker
Dean Baker is a macroeconomist and codirector of the Center for Economic and
Policy Research in Washington, DC. He previously worked as a senior
economist at the Economic Policy Institute and an assistant professor at
Bucknell University. He is a regular Truthout columnist and a member of
Truthout's Board of Advisers.
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By Dean Baker, Truthout | Op-EdThe Anniversary of Lehman and Men Who Don't
Work
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By Dean Baker, Truthout | Op-Ed
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