Obamacare is Working, and It Will Probably Continue to Work

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Tyler Cowen isn’t satisfied with current answers to the question of how well Obamacare is working. But although no one has firm answers to the questions he asks, I think we know more than he implies we do—especially when you widen your scope beyond just the details of the Obamacare transition over the next few years. Here are a few quick responses to his questions:

1. Five to ten years from now, how much do we think employment will have gone down as a result of ACA?

Take a look at Europe. The answer almost certainly is (a) perhaps a little, but not much, and (b) it’s going to be swamped by other factors anyway. In fact, if Obamacare eventually leads to the end of employers being responsible for health insurance, it could end up helping employment. More generally, though, if you’re worried about employment trends, then health care taxes and mandates should be the least of your concerns. They’re just a blip by comparison to everything else going on.

1b. How will the effort to introduce greater equality of health care consumption fare if wage and income inequality continue to rise?  Will this attempt at consumption near-equalization require massively distorting incentives?

No. Even if we move to full universal health care, it will likely raise marginal tax rates by something in the neighborhood of 6-7 points. That’s nothing to sneeze at, but the bulk of it will replace current spending by employers and will do little to distort anything. The remainder is simply too little to introduce more than a modest amount of distortion in a $15 trillion economy.

2. Will ACA even have improved overall health in America?

Probably a little bit, but not a lot—though it depends on how you measure it. Especially in the under-65 age group, for example, it will do little to reduce mortality. However—and this is something I can’t repeat often enough—this is not the main point of universal care anyway. The main point is to improve quality of life and reduce the life-shattering financial consequences of serious medical emergencies.

3. Given that prices in the individual insurance market already seem to have gone up 14-28 percent, and may go up more once political scrutiny of insurance companies lessens, what is the overall individual welfare calculation from this policy change?

Actually, prices will probably go up less in future years. The initial increase was a one-time response to the new requirements of the law, especially the addition of lots of sicker people to the insurance pool. In the future, given the competition between insurance companies, increases are likely to roughly match the rate of health care inflation.

4. Given supply side constraints, how much did ACA increase the consumption of health services in the United States?

We don’t know yet. But obviously the answer is that, yes, any kind of universal health care entitlement will increase consumption. Once again, though, look at Europe. We have decades of experience in lots of different countries with a wide array of different forms of universal health care, and in every case health consumption is lower than in the US. There may well be birthing pains associated with Obamacare, but in the longer run there’s simply no reason to think that it inevitably has to lead to a significant increase in consumption.

5. How much of the apparent slowdown of health care cost inflation is a) permanent, b) not just due to the slow economy, and c) due to ACA?  Or how about d) the result of trends which have been operating slowly for the last 10-20 years?

Obviously historical evidence is never conclusive, but the historical evidence we have points very, very strongly to a permanent slowdown. There’s a lot of variability in medical inflation, but one of the most underreported trends in health care reporting has been our steady, 30-year-long decline in medical inflation. There’s no special reason to think this is suddenly going to change.

If I were allowed only one answer to all these questions, it would be this: Just look at the rest of the world. Health care is not an area where we’re confined to econometric studies and CBO models. There are dozens of countries that have implemented national health care in dozens of different ways, and we can look at how they’ve actually done in the real world. Almost universally, the answer is that they’ve done better than us on virtually every metric. Unless you really, truly believe that the United States is a unique outlier to the laws of economics, there’s very little reason to believe that national health care in America would fare any worse.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate