The Maryland Public Policy Institute
In the wake of the Supreme Court’s decision to uphold the Affordable Care Act (aka, “ObamaCare”), supporters of the law are doing their best to convince a skeptical public that this law is a great deal for Americans. Since polling consistently finds the law remaining unpopular, it seems these advocates need to do a better job. They can start with getting basic facts straight about the health care marketplace.
Mike Pretl of the Health Care for All Coalition trots out the typical pro-ObamaCare talking points in an op-ed in the Salisbury Daily Times. He makes a number of dubious claims, but perhaps his most unfounded assertion is this one: “The new law will add to the rolls many of the currently uninsured -- for whose care we all now pay indirectly -- reducing costs without substantially increasing our tax burden or interposing the government between you and your doctor.”
His idea that adding people to the rolls of the insured (which, under ObamaCare, will generally happen through Medicaid) will reduce costs without substantially raising taxes is partly right. It won’t substantially raise taxes only because the federal government is running a huge deficit. The federal government will have to pay for the estimated $931 billion that the Medicaid expansion will cost through borrowing, not tax increases. So our taxes won’t go up now to pay for this expansion, certainly, but someone, at some point, will have to pay the bill.
The really incorrect part of his statement is that this Medicaid expansion will reduce costs. It won’t. As I discussed in a previous post, the idea that uncompensated care is a huge problem in our health care system is largely a myth. It does pose some problems, but if we want to fix these problems the worst thing we could do is to expand Medicaid.
Advocates like Pretl claim that our insurance rates are increased because the uninsured use uncompensated care and don’t pay for it. In turn, doctors and hospitals then bill those of us with insurance more to make up for those losses. But in reality a much larger cause of this cost-shifting is treating Medicaid patients, as Peter Suderman explains in Reason magazine:
Medicaid recipients, on average, consume about twice as much health care as the uninsured. Second, provider reimbursement rates for Medicaid beneficiaries tend to be significantly lower than private insurer payment rates—averaging about 58 percent of what private insurers pay (rates vary by state). In fact, Medicaid reimbursements are so low that providers take a loss on Medicaid patients—a fact that President Obama himself implicitly acknowledged in a March 2010 letter to Congress, noting that “Medicaid reimbursements to doctors are inadequate in many states.”
Millions more Medicaid patients means many more visits to health providers—and, as a result, increased losses by providers accepting Medicaid beneficiaries. As the old joke goes, they’re losing money on each patient but making it up in volume.
According to an amicus brief filed with the Supreme Court by several free market policy organizations, including the Galen Institute and the Pacific Research Institute, losses associated with underpayments from the mandate’s Medicaid expansion could total between $10 billion and $12.5 billion each year. The brief estimates that the 16 million individuals covered as a result of the mandate would otherwise have used just $9.5 billion in uncompensated care, meaning that under the law the total losses would increase by as much as $3 billion annually. It is possible, in other words, that the law will exacerbate the very problem its advocates say it is designed to fix.
So, yes, as Pretl says, we do indirectly pay some of the health care costs for the uninsured now. But ObamaCare pushes more people into Medicaid, a program that imposes these indirect costs on us, too. In fact, there are good reasons to believe that we’ll have even more cost-shifting as a result of ObamaCare, resulting in even higher insurance rates for those of us not on Medicaid. This is a fact that ObamaCare defenders like Pretl either fail to grasp or hope we all overlook.
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