Move over climate change, gun control and fiscal responsibility. Of all the subjects that fire up the hornet’s nest of political divisiveness in Washington, D.C., the Affordable Care Act has to be at the top of the list.
It shouldn’t be a surprise to anyone who’s paid attention to Republican and Democratic narratives over the years.
Republicans believe in smaller government, individual choice and personal responsibility, while Democrats preach active government, shared opportunity, and lifting up the masses.
The differences between the two philosophies isn’t as abrupt as it might otherwise appear, as both sides have diverse constituencies and members who espouse elements of both platforms. However, for a variety of reasons, the sweeping health care law colloquially known as “Obamacare” has created a line in the sand that has defied compromise. In short, Democrats generally support the health care law, while Republicans seek to repeal it.
What Are Obamacare’s Economic Benefits?
The Affordable Care Act was signed into law by President Obama in 2010, with some provisions made effective immediately. After the Supreme Court upheld the individual mandate/tax as constitutional in 2012, and following the creation of exchanges for consumers to choose from a variety of health plan options, a full roll-out began in late 2013, with coverages effective as of January 1. The employer mandate — businesses of 50+ were to be required to offer health insurance to their employees or pay substantial penalties — was delayed until 2015.
Early distractions, such as the furor over President Obama’s “If you like your plan and you like your doctor, you won’t have to do a thing. You keep your plan. You keep your doctor” claim, as well as the botched web site roll-out, slowed initial enrollment. However, the percentage of uninsured individuals in the U.S. fell to 12.9% during the fourth quarter of 2014, down from 17.1% one year earlier. To date, almost 11 million people have gained health insurance through the Affordable Care Act.
Furthermore, Obamacare was touted as a damper on the rise of federal government health care spending. Total budgetary appropriations for health care — just 3% of GDP in 1980 — had more than doubled over the next three decades, increasing to nearly 7% by 2009. The Congressional Budget Office (CBO) estimated a relatively-flat expenditure of 7.4% in 2015, indicating that the law may be helping moderate the pace of federal budgetary allocations.
The CBO also recently revised its forecast of the cumulative cost of Obamacare downward by 20% over the next ten years, cutting $139 billion from its original estimates.
A third goal of Obamacare was to slow the decades-long rise in consumer health care expenditures. The Great Recession has already played a role, as annual increases have been steadily decreasing for years.
To this point, it is too early to determine whether or not Obamacare has been a factor in achieving that objective.
Obamacare’s Budgetary Costs
Despite the flattening of the healthcare cost curve, Obamacare is still a massive federal government program. Reports of the Affordable Care Act’s projected net costs (expenditures minus taxes and penalties) are $571 billion over the next five years and $1.35 trillion over ten. Considering the best-case scenario of 27 million fewer uninsured Americans by 2025, the overall expenditures work out to roughly $50,000 per person.
How can total costs be projected to rise more slowly with those kinds of numbers? Simply put, offsets achieved via shifting resources from existing programs to ACA. As an example: Medicare, which provides benefits to 54 million people age 65+, will spend roughly $1,000 less per person than projected just four years ago. A large part of the reason is the advent of Obamacare.
After increasing by an average 7.7% between 1969 and 2012 , the CBO forecasts future Medicare increases to remain essentially flat as a percentage of GDP through 2019. That type of reallocation explains how the overall cost curve is moderating, at least through 2019. It should be noted that the pace of increases is expected to quicken after that.
Obamacare Premiums on the Rise
According to Obama administration officials, premiums in the 35 states that participate in the health insurance exchanges are anticipated to rise an average of 5% in 2015. Some states, however, have seen double-digit increases. Others have seen slight decreases.
In most states, there are more options available on the open market than last year, helping to keep premiums from rising substantially.
Health and Human Services Secretary Sylvia M. Burwell said in a recent statement, “In today’s marketplace, are competing for business. Returning customers may find an even better deal if they shop and save.”
Obamacare’s Political Consequences and Future Developments
A July, 2014 Gallup poll showed that 56% of respondents view the law unfavorably. Other major polls by Rasmussen Reports, CBS News, Pew Research, and the Associated Press also indicated a negative outlook.
Concerned over potential political backlash, Democrats have generally been measured in their comments about Obamacare over the past year. House Republicans, on the other hand, have remained galvanized, voting dozens of times to de-fund or repeal the law — most recently on February 3, 2015.
Attempts to repeal the law are largely symbolic, as even if the Senate were to go along — unlikely, given that Republicans do not have a filibuster-proof majority — President Obama would certainly bring out his veto pen. However, the continuing efforts keep the battle over the law in the forefront of the minds of the electorate, which likely benefits the GOP at the polls. The recent Republican takeover of the Senate last November may in part have been the result of swirling negativity over Obamacare.
Nevertheless, a new effort has been launched. In advance of a Supreme Court hearing over key tax subsidies which make Obamacare affordable to lower-income individuals, Republicans Richard Burr (R-NC), Orrin Hatch (R-UT) and House Energy and Commerce Committee Chairman Fred Upton introduced legislation for a replacement plan. Early opinions of the proposal predictably fell along party lines.
In the face of the debates over the benefits, costs and politics of the Affordable Care Act, U.S. Representative Hank Johnson (D-GA) may have said it best: “Love it or hate it, Obamacare is the law of the land. It was passed by Congress, signed into law by President Obama, declared constitutional by the U.S. Supreme Court and ratified by a majority of Americans, who re-elected the president for a second term.”
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