BY PETER SUDERMAN – Oh happy day! It’s ObamaCare’s first birthday. And although there’s no cake, Health and Human Services Secretary Kathleen Sebelius decided that it was time to give the law (and its beleaguered supporters) a pep talk, and try to make the case that maybe this ObamaCare thing ain’t so bad after all.
Given the steadily increasing opposition to the Patient Protection and Affordable Care Act, you might not think that Americans are enjoying all that much about last year’s health care overhaul. But if so, according to Sebelius, you’d be wrong.
Thanks to ObamaCare, the secretary says, “the American people are enjoying new protections, greater freedoms and lower costs.” For example, they are “enjoying”: the freedom not to purchase child-only health insurance policies, and the freedom to be informed by The New York Times that “the rising cost of health care is prompting insurance premiums to skyrocket while coverage is shrinking” and that “health insurance costs are still rising, particularly for small businesses.”
But fear not; relief is on the way. Just hold on tight for a few more years until the subsidies savings kick in.
A family of four, making $55,000, could save more than $6,000 a year on health insurance in 2014. For a family making $33,000, those savings will be nearly $10,000 annually.
This is true, at least if you can’t tell the difference between savings and subsidies. Historically, Sebelius has had trouble with this distinction, so it’s worth explaining again: The total price of health insurance purchased on the individual market is actually projected to rise. But many individuals will also be eligible for federally funded health insurance subsidies. So ObamaCare uses money collected from taxpayers to subsidize the purchase of health insurance that is projected, on average, to be more expensive. There are no savings here, just a few hundred billion dollars in taxpayer-funded subsidization.
Ultimately, we know that the biggest factor driving up premiums is the soaring cost of care.
But why has the cost of care soared for decades? There’s evidence to suggest that the provision of subsidized insurance following the implementation of Medicare drove up demand and provided a well-funded payment base that providers could count on—and thus drove up both the cost of services and overall spending.
So, as part of the health care law, we have invested in preventive care, and innovative programs aimed at slowing that growth of premiums.
What is it they say about an ounce of prevention? Oh, right, it’s that there’s quite a bit of evidence to indicate that government-driven efforts to encourage preventive care don’t save money. In fact, according to the Congressional Budget Office, “for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.”
What about those “innovative programs?” Ah, yes. Sebelius must be referring to the bill’s much-lauded “pilot programs”—government-managed experiments designed to figure out how to make care cheaper without sacrificing quality. But the best case for believing that the law’s pilot programs will eventually pay off is a weak one: If the government funds enough projects, a few of them just might work. Fingers crossed!
I’d encourage anyone tempted to put their faith in government-driven pilot programs to read John Goodman of the National Center for Policy Analysis. He’s argued that there are two big problems with this approach. First, policymakers don’t actually know if any of the pilot programs will work. Second, even if they do produce results, they have to be replicable. And as Goodman explains, there’s precious little evidence to suggest that the practices are easily replicable. Even those who support the pilot program approach have a hard time extracting anything more detailed than generalities from their research. How many bureau-wonks does it take to determine that the nation’s top performing medical institutions have better leadership and make use of measurement tools and financial incentives? These are not exactly stunning insights, but those are the sort of findings that came out of a research project co-authored by the Obama administration’s current Medicare chief, Donald Berwick.
That’s not to say that innovation and experimentation can’t work. They do. But it shouldn’t be thought of as a top-down process driven by thousands of pages of intricate federal legislation. ObamaCare’s designers put their hopes in a centrally planned cost-control miracle.
Is it any wonder the law is so unpopular when its most prominent defenders are so unconvincing—and when its many problems are so apparent? It’s got to be painful for administration officials to see their biggest achievement flail like this. Regardless of the line they’re selling about the public, I can’t imagine they’re enjoying it at all.