How will we know if the ACA is working?

by on July 14, 2014 at 7:19 am in Economics, Medicine, Uncategorized | Permalink

I have read a good deal on this topic and I am not very satisfied with most of it, from either side.  Too often citing and then refuting weaker claims from the other side is conflated with showing that one’s own view is right.  Here are a few issues we ought to consider and indeed focus on:

1. Five to ten years from now, how much do we think employment will have gone down as a result of ACA?  (That is from the employer mandate, high implicit marginal tax rates because of the subsidies, and also from a lesser need to stay employed to have health insurance.)  By the way, you can’t in other contexts believe strongly in rigidities and then confidently point to a small employment response within a one year time frame and claim to know these labor market effects are small ones.

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?

2. Given your answer to #1, and given how much employment itself boosts health, will ACA even have improved overall health in America?  What outcome indicators might show this?

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?  I mean using actual economic policy analysis, of the CBA sort, not just noting that more people have health insurance.

4. Given supply side constraints, how much did ACA increase the consumption of health services in the United States?  (I take the near-universal bafflement over the first quarter gdp revision a sign of how poorly we understand what is going on.)  And how good or bad a thing is the ongoing but accelerated shift to narrow provider networks?

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?

Is there one of these questions we know the answer to?  Know the answer to much better now than before?

ummm July 14, 2014 at 7:42 am

As everyone knows in economics, there is no free lunch, but ACA in trying to disprove that maxim will fail miserably. It will cause higher unemployment, it will not have any meaningful impact on the number f uninsured, nor will it lower healthcare costs or improve healthcare quality.

dead serious July 14, 2014 at 7:49 am

Higher unemployment is bad because ________ ?

Voluntary unemployment is bad because _________ ?

Just curious.

ummm July 14, 2014 at 7:51 am

tyler explains

That is from the employer mandate, high implicit marginal tax rates because of the subsidies, and also from a lesser need to stay employed to have health insurance.

lipby July 14, 2014 at 1:04 pm

I would think that a lesser need to stay employed to have health insurance would boost the entrepreneurial ambitions of Americans. Not seeing how decreasing job lock is a negative for anyone.

There are also reasons to think that creating greater efficiencies in the health sector would be stimulative.

Marie July 15, 2014 at 12:13 am

“Not seeing how decreasing job lock is a negative for anyone.”

I think it’s just in how you do it.

Congress could have ended job lock in a day by making it illegal for a business to buy medical insurance for an employee, and then requiring insurance companies to sell private policies to everyone under the same terms as long as they had maintained continuous coverage.

ummm July 14, 2014 at 7:55 am

It’s generally accepted that higher unemployment is bad. Perhaps one could make the perverse argument that ACA will have the hidden benefit of keeping unemployment high and this will enable the fed to keep the foot on the monetary pedal longer than without the ACA.

ZC July 14, 2014 at 8:19 am

If unemployment is only higher because people who were only staying at their jobs for insurance now don’t have to, then higher unemployment is, indeed, a good thing. (which I think dead serious is getting at)

Alan Gunn July 14, 2014 at 8:35 am

Yes, I think Nancy Pelosi ,made that argument. The ACA will be good because people who want to become artists and such will be free to quit their boring jobs and thrive. If we were really serious about this, I suppose we should also have an ACA for food, clothing and shelter, as some of those would-be artists need to eat, dress, and stay out of the rain.

Which is not to deny that tying medical care to people’s jobs was a very bad move. Not that the ACA does much to change it.

Turkey Vulture July 14, 2014 at 9:05 am

That may be a good kind of unemploymemt caused by the ACA, but it isn’t the only one. Too many supporters argue as if 100% of the expected decline in employment is because people will be able to get reasonably priced insurance on the exchanges and so will no longer be forced to work just to have access to an insurance plan. But that is nowhere near 100% of the expected employment decline, and anyone who argues as if it is makes it clear they are a disengenuous partisan.

dead serious July 14, 2014 at 9:07 am

If you’re pointing at me, I haven’t argued that.

- not a fan of ACA but having to keep a shitty job just because you need health care is a weird dynamic

ZC July 14, 2014 at 9:23 am

Alan, I don’t think that’s a good analogy. The issue was that buying insurance in the non-group market was really, really bad. You don’t have access to worse food when you don’t have a job, whether or not you can afford it.

Turkey Vulture: No disagreement there. But the positive gains from reduced job lock can be quite high. Finding a job is hard, and it’s much harder when you have to work a bad one at the same time!

Z July 14, 2014 at 9:28 am

I’ll take Lunatics for $500 Alex.

Answer: Big Foot, The Loch Ness Monster, Moderate Muslim and People Keeping Shitty Jobs for the Health Insurance.

Question: What are things that exist only in the mind of the lunatic?

byomtov July 14, 2014 at 9:51 am

I know actual, real live people – a fair number – who stayed at jobs longer than they wanted to because of health insurance. In most cases they wanted to retire early, and were financially able to do so, but the risks of losing coverage deterred them.

So, no. They don’t exist only in the mind of the lunatic.

If you don’t think there was some job lock as a result of our previous system you’re the lunatic – as in out of touch with reality.

dead serious July 14, 2014 at 9:53 am

Yes, absolutely nobody in the US has ever had to keep an unwanted job because of the health care benefits and no other reason. Except ~2.5 million people. Except them.

http://www.forbes.com/sites/rickungar/2014/02/04/cbo-says-obamacare-will-reduce-employment-by-2-5-million-but-not-for-the-reason-you-think/

The Other Jim July 14, 2014 at 10:23 am

>I’ll take Lunatics for $500 Alex.

Nice.

Also, I like the way “shitty job” has been redefined to include “one that provides you with health insurance that is so valuable to you that you can’t do without it.” What exactly is the shitty part here? That you have a boss who makes you do stuff, and you can’t just sit around and finger-paint all day?

Marie July 14, 2014 at 10:26 am

@dead serious,

I believe the point of that story is not that people were keeping hours they didn’t want before, but that they are dropping hours now because the rate of pay is effectively reduced for those extra hours by ACA.

There certainly were folks who kept positions in order to keep insurance. In many cases, these folks thought they had no options when they did have options. We were able to switch from a job with benefits to a job without even though we had a pre-existing condition in the family. But it took a lot of work to figure out how to do it. It was a shameful thing that people felt they were without choices. It also was a problem that people thought they had security by staying with a company. Few people thought through that if they acquired a debilitating, expensive chronic illness they probably would not be able to keep the job that their insurance was tied to. Others had to keep working during a spouse or child’s illness in order to keep insurance. I find this situation criminal. The law should not have allowed it, much less encouraged it.

ZZZ July 14, 2014 at 10:30 am

If they currently have coverage they count as continuously enrolled and would not have trouble getting individual coverage. The only way job lock is applicable is if they can’t afford to pay the unsubsidized premium. So saying someone is job locked because they could retire if they didn’t have to pay for health care is like me saying I’m job locked because I have to pay my property taxes.

Slocum July 14, 2014 at 12:25 pm

I know actual, real live people – a fair number – who stayed at jobs longer than they wanted to because of health insurance. In most cases they wanted to retire early, and were financially able to do so, but the risks of losing coverage deterred them.

Well, they were financially able to retire…apart from the little detail of paying for the (high) cost of health insurance for people in the 55-65 age range. But now they can retire and also calibrate their 401K withdrawals to hit the sweet spot for ACA subsidies. And, to add insult to injury, this will also tend to impact the social security system as well (since it will enable more people to retire at 62 rather than waiting at least until Medicare eligibility at 65).

Tasha July 14, 2014 at 4:19 pm

Reply to Slocum: social security benefits are actuarially adjusted to account if someone retires at 62 instead of 65. If everyone eligible retired at 62, regardless of ACA, it would have no impact on SS solvency.

Boonton July 15, 2014 at 5:33 pm

Yes, I think Nancy Pelosi ,made that argument. The ACA will be good because people who want to become artists and such will be free to quit their boring jobs and thrive. If we were really serious about this, I suppose we should also have an ACA for food, clothing and shelter, as some of those would-be artists need to eat, dress, and stay out of the rain.

I doubt Pelosi or anyone made that argument. But let’s say someone did, is it true about the ACA? I’m not sure how?

Say today you’re working boring corporate job, wishing you could be a hip artist instead. While you get coverage from your boring corporate job, you also get paid money, which is always helpful. ACA gets passed so you quite your boring corporate job.

OK, so now how do you get coverage? Buy it from the exchange? OK, but that presupposes you are making a somewhat decent living as an artist. Or maybe you don’t have any money and you happen to be in one of the states that expanded Medicaid? OK you got ‘free’ coverage but you now have less money and not quite as nice coverage as when you had that corporate job.

I don’t see the ACA saying ‘go ahead, quite your job and be a starving artist’. I suspect the response most job holders have to the ACA is to….well just keep their job and go to work on Monday. The only people this case makes sense are those few people who could pull off a decent living free lancing or ‘being an artist’ but didn’t want too because they didn’t trust the individual insurance market to give them reliable insurance for non-insane premiums. In that case you probaby have a modest welfare gang as you do indeed decrease ‘job lock’ and let the labor market get a bit looser.

andrew' July 14, 2014 at 8:36 am

Because its not really voluntary. We’ve been over this.

dead serious July 14, 2014 at 9:05 am

See above. It could be for people outside your small circle of friends if you can imagine it for half a second.

Andrew' July 14, 2014 at 10:07 am

No it’s not. David Henderson explained it.

Andrew' July 14, 2014 at 10:10 am

And cut the smarmy doucheness, please.

dead serious July 14, 2014 at 1:41 pm

Shut up and read the article. It’s on Forbes for Christ’s sake, not Mother Jones, so you don’t have to get your panties in a knot.

LonelyLibertarian July 14, 2014 at 10:34 am

Two things…

1. I think this thing is called the Affordable CARE Act – NOT the Affordable INSURANCE Act. Conflating the two is at the heart of a number of problems. There were many ways to make CARE more available and affordable that had nothing to do with insurance. Free clinics and community health centers could have been supported and expanded. The number of VA facilities could have been expanded and better funded making GOOD care more accessible and affordable for our Veterans (and taking them off of Medcaid/Medicare).

2. The attack on the virtues of “work” has been withering and the benefits of work seem to be discussed ONLY in the context of ESI. I have seen a number of studies that speak to the “side effects” of being unemployed – higher rates of obesity, more smoking and more substance abuse. But these negatives seem to be less important than allowing everyone to pursue his or her “dream”. I believe – but cannot prove – that having even a “crappy” job is better for one’s overall “health” than sitting on the coach and watching one’s flat screen TV or playing video games all day. The argument should not be framed around how bad “Job lock” is – or is not, but focused on helping everyone get a “less” crappy job…

Marie July 14, 2014 at 10:46 am

The two things should not be confused.

Saying a guy should be able to get free health care even if he chooses to not work at all is one issue.

Saying labor should be free to move about without the free market restriction of health care being de facto tied to one employer is another.

I personally feel like the second was a factor not because the restriction was accurate (there were already solutions in place) but because the perception was so entrenched and widespread that it dictated the behavior of many.

dead serious July 14, 2014 at 2:12 pm

I think you make a mistake of thinking that because you were lucky enough, and persistent enough, to iron our your very particular situation – and everyone’s situation is particular due to circumstances, who your providers are, etc. – everyone has the same facility to change jobs, or go jobless and enjoy anywhere near the same level of coverage.

I am lucky to not suffer any chronic or pre-existing condition, but I’ve broken a few bones. (Mostly kicking right-wing ass, but that’s another story.)

Anyway, I can’t imagine life in this country without health insurance, or worse, with some pre-existing condition and at risk of having your coverage dropped. One serendipitous event can easily, easily bankrupt even the most hardworking and financially conservative family.

Marie July 14, 2014 at 4:11 pm

@ds,
I’ve noted here before, we were in a situation with a pre-existing that excluded us from buying insurance off the regular market. I believe 36 states already had options in place for pre-existing.

We were not exactly in an ideal situation. However, you are absolutely, absolutely right that we were extremely fortunate in our opportunities and resources and others would not be so. The situation did need to be improved, and the fact is that many people did not know what options they had and were never going to know, or were not in a position to take advantage of those options because their situation was precarious enough that the devil they knew was better than the devil they didn’t.

I 100% agree there were, and are, folks in a bind. My point above is simply that you can make the case for portability based not on charity but on the basis of freeing the market from artificial constraints. But I had to add the caveat that I think the situation was bad mainly because people had been fooled into thinking they had no options, not because people had no options.

Don’t break a leg on me!

derek July 14, 2014 at 11:09 pm

I learned from a business contact that they found it cheaper to pay for knee surgery for his wife than wait the years typical for that treatment. They paid the money and were halfway into the rehab period of 6 months. They concluded that the two years of lost labor was far more expensive than the surgery.

Medical bankruptcies are common even with single payer health care.

Dick King July 15, 2014 at 12:52 am

Derek [July 14, 2014 at 11:09 pm], what country was this in?

-dk

Marie July 15, 2014 at 10:16 am

Derek, I go similar places.

I vaguely knew a guy years ago, very competent and good at his job, making a decent salary with good benefits. Several pre-existing in the family, and he wanted to go out on his own but he was convinced he had to stay at his job (at least unless he found another with benefits to jump right over to) for the insurance.

Here’s the problem, not too long after I think he got laid off. Turned out all right, he found another position.

But he thought he had some insurance security as long as he stayed at his job. But businesses close, job categories disappear, lay offs happen. He stayed the safe route because he thought he couldn’t risk trying to start his own business and buy private insurance and use the pre-existing pools. But if he had bought private insurance for his family before any of the conditions showed up (instead of being with a company), he could have taken the insurance where ever he went as long as he paid the premium. If he needed to be with a kid during a time of medical emergencies, he could have taken time off as long as he’d saved enough to get by and to pay the premiums. But since his insurance was linked to the job, he had to work when his family might have needed him at home.

He took the safe route because he was a responsible, good family man. It came back to bite him.

So, job lock? Yes, in perception, but without the security that people who let themselves be locked in thought they were getting.

derek July 14, 2014 at 11:03 pm

You’re kidding right. People work because they like luxuries such as eating and a place to live. I live in a place that has single payer health care, and at low income the fees are not required. People work because they need to pay for things like dental care, food, transportation and housing.

The ACA forces people into a situation where a little more income costs all the insurance subsidies. I used to think that the welfare trap and various extreme marginal real tax rates on income were an unfortunate hard problem with safety net arrangements. I’ve learned that it is now called voluntary unemployment and helping people find their inner poet. My opinion is that it is a representation of the evil that is the progressive agenda.

dead serious July 15, 2014 at 12:20 pm

Some people have the eating and place to live covered but healthcare is such a massive expense (and risk) that to be without it is not an option.

I’m not talking heads of households in the prime working years here. I’m talking people on the verge of retirement, for example. Or situations where one spouse is a consultant, or trying to get a business off the ground and the other is forced to work somewhere just for the healthcare perks even though the family would prefer (and could otherwise financially afford to have) one spouse to be a stay-at-home parent.

Believe it or not, these scenarios have the temerity to exist even when rich entitled wingnuts insist they don’t.

F July 14, 2014 at 7:56 am

Question 1 seems to rather partisan. Any insurance market has a moral hazard and a adverse selection problem. ACA (and any semi-public insurance system) will generally increase moral hazard and decrease adverse selection concerns. The former effect is efficiency (and hence employment) decreasing, and the latter is efficiency (and hence employment) enhancing. The direction of the effect of ACA on employment is hence unclear, ex ante. Gruber has been saying this for decades so I don’t really see how Tyler missed this point.

andrew' July 14, 2014 at 8:37 am

Maybe Gruber is wrong.

byomtov July 14, 2014 at 9:51 am

Or maybe he is right.

Andrew' July 14, 2014 at 10:08 am

Pointer?

Turkey Vulture July 14, 2014 at 9:09 am

It is ex ante unclear if no effort is made to quantify the extent of either predicted effect. Saying “on the one hand, but on the other, therefore we don’t know” is a good rhetorical trick, not a definitive answer to a question of the sort presented.

byomtov July 14, 2014 at 9:52 am

True, but it wrong to frame the question, as Tyler does, as if only one effect were present.

Andrew' July 14, 2014 at 10:09 am

Give me the link.

If one effect is not there, then you can discuss the problem in terms of the other effect.

ZC July 14, 2014 at 10:15 am

http://www.ciss.org.mx/pdf/en/studies/CISS-WP-04012.pdf

dead serious posted a forbes link upthread also.

Andrew' July 14, 2014 at 10:22 am

No, I want a link to Jonathan Gruber “correctly” analyzing adverse selection.

Andrew' July 14, 2014 at 10:23 am

Or anyone, it doesn’t have to be Gruber.

Andrew' July 14, 2014 at 10:26 am

That paper, after skimming, does not look good for what it is being used to claim here, whatever that may be. I’m not even sure what point anyone here would be trying to make with that paper.

Just for starters, the government creates the problems of linking insurance to employment. To conclude that this necessitates government programs to cover the unemployed or employed and uncovered is simply false.

Andrew' July 14, 2014 at 10:35 am

That forbes link argument, btw, was dealt with at the time of the CBO report. It is a partial analysis.

Keynesians of all people should understand the problem. If you take the hair dresser’s money to provide the babysitter with “voluntary” unemployment what happens next?

F July 14, 2014 at 10:38 am

Gruber’s website is filled with publications in top-journals quantifying the effect of public health insurance on adverse selection. This is a column in simple terms, but Tyler should know better than to post just one side of the debate on his blog to non-experts: http://www.newrepublic.com/blog/plank/104791/gruber-care-act-job-killing

Andrew' July 14, 2014 at 10:55 am

F,

“non experts”?

I keep pointing out the problem with the people who keep thinking TC is somehow fooling us is you assume you are smarter. You aren’t.

You don’t even understand the questions we are asking you.

Andrew' July 14, 2014 at 10:57 am

I’m going to read your article and it is either not going to address the issue, or address it wrongly.

Want to bet?

Andrew' July 14, 2014 at 10:59 am

“But what few realize is that, by expanding insurance coverage, the law will also increase economic activity. These newly insured individuals will demand more medical care than when they were uninsured. ”

So far, so NOT good!

Andrew' July 14, 2014 at 11:05 am

“More immediately, the increase in economic security for American families will also mean an increase in consumer spending.”

Oh boy. Non-Experts you say?

Are you guys really serious?

No mention of the mandate. That is the part that addresses the issue at hand. And it is underpriced (not to mention likely to be massaged in a populist direction on the future). So, ACA makes adverse selection worse up front and likely makes it worse long-term. So, for TC to argue without adverse selection considered at all is doing ACA a favor.

It is amazing that after 5 years you guys (and your so-called experts) are still REALLY getting the information asymmetry and adverse selection problem backwards. Guaranteed issue does not address adverse selection, it makes ignoring it mandatory. This was bought off by the mandate. The mandate does not cover the cost of the adverse selection problem. So, it is covered by the taxes which is part of what will reduce employment both voluntarily and involuntarily.

And you just ignore this and go back to condescending.

ZC July 14, 2014 at 3:27 pm

Andrew, it was a link talking about job lock, with is the “other effect” you asked about. I have no idea what you mean when you say “No, I want a link to Jonathan Gruber “correctly” analyzing adverse selection.” other than that you want to be a troll.

Here, I’ll help you out. Hopefully this will help people who aren’t arguing disingenuously.

A literature review: http://economics.mit.edu/files/75

More specifically:
Gruber and Madrian on retirement: http://www.nber.org/papers/w4469.pdf
Gruber and Madrian on portability: http://www.nber.org/papers/w4479.pdf

Jan July 14, 2014 at 4:22 pm

Don’t even argue with him. Andrew’ remains unconvinced about anything that doesn’t confirm his priors. I’ve fought with him, provided info and challenged him about his lack of evidence for most stuff he says. Never works. It may convince others though.

BenK July 14, 2014 at 8:06 am

In my mind, there is no way that we could demonstrate that the ACA ‘worked’ – and this is an essential problem.

To return to some decisions that led to the ACA – one of the biggest was the decision to implement wage controls in the private sector, so that
executives could be hired by the Federal Gov’t at some ‘reasonable’ salary. This is not the $1 men – those men made very respectable sacrifices
to contribute to the government – this is essentially their opposite.

Now, how would we assess the success of that policy? Probably by measuring the influx of executives into the federal government into
‘critical’ – particularly wartime – positions. However, the side effect was competition not on salary but on benefits at key corporations; and this
started a slow domino effect of employer-provided health insurance. This side effect would not have been measurable at or near the time;
at the start, it applied to rather few positions and also wouldn’t have shown up as more than a blip. Perhaps a few people who didn’t go to the
government for employment despite the wage controls.

However, 60 years later, it has absolutely transformed (in a very negative way) the entire structure of health care in America. There
were other options that are seemingly unavailable now.

There is no way, a priori, to know which side effects to measure; but given tons of information about the VA, NIH, DHHS, and so on, I cannot
believe that the ACA will actually be beneficial to the nation. It will raise the flux of resources through the federal government drastically and
bring it into even closer contact with health care and individuals everywhere. That’s like raising the water pressure on an already failing system
of pipes, or the tides against a failing seawall. I just can’t tell you where the system will fail catastrophically next.

Yancey Ward July 14, 2014 at 9:35 am

+1

Marie July 14, 2014 at 9:45 am

Excellent.

“There were other options that are seemingly unavailable now.”

I’m not surprised your average Joe, who has better things to do, doesn’t know there are options other than employer-provided insurance or government-provided health care payment. But Nancy Pelosi should certainly know that if she wanted folks to be able to pursue their art career the answer was to roll back employer-provided insurance.

Jan July 14, 2014 at 4:25 pm

I think everyone agrees that ESI is not the best way to do insurance. The exchanges are starting to push us away from it. The reason that it wasn’t in the ACA is that nobody–including the R’s (they were actually at the table at one point)–wanted to shake up the health care system that much, even if it makes total sense. Part of the blame is on Congress for not trying to educate people, part of it is on the average citizen who is too stupid to actually read up on anything.

Marie July 15, 2014 at 12:33 am

I’m way ignorant, what is ESI? Employer provided insurance? Is there consensus on that now, that this is a bad way to do it, because I only started hearing people even aware of the problem recently. That would be fabulous. I don’t think people are necessarily super stupid, I think we just fall into the trap of assuming the way we do things now is the way it’s always been. They had to have someone tell them there was another way before they knew to look into it.

Jan July 15, 2014 at 10:07 am

Yeah, sorry, that is what it is. I think there is certainly consensus that it is not ideal for most people to get their insurance via employers. Of course, employers like to be able to provide compensation as health insurance, because it not subject to the same taxes as salaries, so that will be a barrier to change. Nobody has really been aggressively touting the downsides of ESI, so you’re right that the average citizen has admittedly not had many opportunities to learn about it. However it directly affects them so they have an incentive to understand this stuff.

Andrew' July 14, 2014 at 10:40 am

As I’ve pointed out before, the system worked when the net present value of health insurance was lower than the psychic value of health insurance.

Now the math has flipped. That’s why it no longer works.

Tyler Cowen doesn’t get frustrated because he gets paid to repeat himself!

Jan July 14, 2014 at 4:23 pm

Your last point is true.

Jan July 14, 2014 at 11:31 am

Obviously it well adapt, it must. If that doesn’t happen, it will again be a total failure of Congress.

Andrew' July 14, 2014 at 11:41 am

Funny, Jan.

Thomas July 14, 2014 at 3:52 pm

ACA proponents would likely disagree with the fundamental question of the success of the aforementioned government programs. The Keynesian economics justification of cost-free or profitable government spending is just a convenient excuse to many who prefer the aesthetics of a control economy to the unsightliness of freedom.

ZC July 14, 2014 at 8:07 am

Tyler, these questions are not the best way to measure ACA. You’re missing the most obvious possible one, which is is whether or not it’s accomplishing the goal in its name–do the poor + uninsured have access to insurance? So far in this it seems to be a success. See Aaron Carroll here: http://blog.academyhealth.org/with-respect-to-coverage-the-aca-appears-to-be-working/. Why you left this one out is a real mystery to me.

With regard to your questions: 1) isn’t the right question. Some of those employment reductions are welfare-increasing (lower job lock [see Gruber and Madrian (2002)]) and some are welfare-reducing (higher employer burden in some cases), and reporting the employment reduction is not a sufficient statistic.

2) is totally off-base. We’ve known since RAND that health insurance doesn’t improve health, and acting like the ACA’s goal was improved health isn’t correct. It could help some receive preventive care that they did not have access to (for budgeting reasons or otherwise), which could improve health, but if the effect was miniscule I wouldn’t grade that a failure for ACA. The point of ACA is to reduce the financial burden of health care, not to create short-run health gains. Any health gains are probably going to be very long-run.

3) (what are the total welfare effects?) is the obvious question but isn’t that the broad question underlying everything else?

4) is the wrong measure, too. The issue isn’t necessarily that the uninsured can’t get medical care, it’s that they’re shunted to the emergency room, which is more expensive since it’s required to treat them. Think of a world where everyone was consuming the ‘right’ amount of care, but the uninsured were consuming it in more expensive emergency rooms. The welfare-improving outcome would be a _reduction_ in spending, not an increase! (this is not the world we live in, but this example should show how, as in 1), what you’ve suggested is not a sufficient statistic) The better metric here is probably emergency room spending (by the uninsured or otherwise) as a percentage of total spending. In the long run, real emergency room prices going down would be a serious victory for ACA. The preliminary results from Oregon (where the newly Medicaid-ed didn’t reduce emergency room usage) are worrisome in this regard, though.

5) is probably the best question on here. I don’t know why lower health care cost inflation would be coming from an economic slowdown though, can’t tell what your intuition there is. I also don’t see how trends from the last 10-20 years would necessarily be going _against_ cost inflation, either.

Plaza July 14, 2014 at 8:39 am

Tyler isn’t asking if ACA is meeting it’s goals. He’s asking if it’s working!

Also, on #2, The ACA was touted as being a way to improve our overall health. Many mandates within the ACA specifically address this. We were told that all this preventable care would improve our overall health. We’ve got yearly physicals, covered mammograms, etc… Plus my doctor has to ask me if I wear my seatbelt!

andrew' July 14, 2014 at 8:50 am

“Access”

We can watch how far the goal posts have moved.

andrew' July 14, 2014 at 8:55 am

Some careful pundits may have equivocated but we can take their audience at their word. More healthcare clearly was not explained to be expected to have no effect.

ZC July 14, 2014 at 9:30 am

I don’t know how “working” and “meeting its goals” are two different things. If I pass policy with the goal of giving money to the poor, is my policy not working if it fails to help them do better in school? “Affordable care” is in the name of the act!

I don’t deny that there was a lot of rhetoric around ACA, not all of it accurate. But from an informed standpoint there was no reason to think that ACA would improve health ex ante–it doesn’t do anything that specifically improves health–so judging it on that metric is misguided.

For those things that do improve health, like what you said, the gains are entirely long-term. I didn’t do a great job of it in that comment (it’s early), but there’s a deep distinction between short-term and long-term health gains. ACA will likely have none of the former and maybe some of the latter, but with the latter we probably won’t know for decades. That’s the problem with (or benefit of!) preventive care.

The Anti-Gnostic July 14, 2014 at 9:45 am

Preventive care means don’t smoke, don’t use drugs, drink in moderation if at all, exercise and avoid sugars and starches. Most of the rest is just nudging another decade out of net-consumers such as the elderly or chronically disabled.

ZC July 14, 2014 at 9:57 am

Not at all. Better managing of chronic-but-not-disabling diseases (e.g. diabetes, hypertension) would provide real long-term health AND productivity gains. I think a lot of people underestimate 1) How prevalent those are and 2) How poorly managed they typically are. I don’t think ACA solves this problem, though–you can’t lead a horse to water, but you can’t make him drink.

The Anti-Gnostic July 14, 2014 at 10:03 am

Diabetes and hypertension are largely caused by people smoking, over-consuming and being sedentary.

ZC July 14, 2014 at 10:13 am

OK. I have no idea what your point is, though.

The Anti-Gnostic July 14, 2014 at 10:19 am

Bad habits are not insurable risks.

The Anti-Gnostic July 14, 2014 at 10:19 am

Or, to put it another way, the Affordable Care Act will do nothing of the sort.

Marie July 14, 2014 at 10:29 am

@Anti-Gnostic,
Diabetes is not caused by those things.

The Anti-Gnostic July 14, 2014 at 10:43 am

Type II, which is 90% of the cases, is caused by poor diet and sedentary lifestyle.

Marie July 14, 2014 at 10:57 am

@Anti-Gnostic,

No, current thinking (straight from an endo’s mouth) is that Type II is a genetic condition you carry from birth. It can manifest itself more clearly, more dangerously, and sooner based on lifestyle choices, and the opposite is true also.

To give an overblown analogy, if a person is a hemophiliac, the condition will only manifest itself if he is bruised or cut. One way to address the condition is by doing what you can to avoid bruises or cuts. But the bruise or cut doesn’t cause the hemophilia.

Sorry to be picky, but there are skinny people out there that develop complications from Type II diabetes because they think they can’t have it, and there are fat people out there that are misdiagnosed with Type II diabetes because they are fat. The distinction between cause and correlation or exacerbation has to be made. Wish Dr. Oz would make it.

The Anti-Gnostic July 14, 2014 at 11:24 am

Your endo is trying to be inoffensive. If it were genetic, they’d diagnose it as Type I. There’s no pesky gene out there waiting to get activated when you blitz your pancreas with starches and sugars, just like genetics aren’t what cause your liver cells to die when you drink alcohol.

Marie July 14, 2014 at 11:36 am

My kid has Type 1, so he wasn’t doing any such thing.

The difference between I and II is not genetic vs. nongenetic.

Type I is an autoimmune disease where the body kills the beta cells in the pancreas that produce insulin, leaving you with effectively no insulin.

Type II is a disease of insulin resistance, where you make enough insulin (and usually bump up production until you wear out your cells so you have more insulin for awhile) but the insulin doesn’t work as well.

It’s not about whether you are born with it or not, they are two entirely different disease processes that happen to have the same effect — too little glucose in the cells, too much in the bloodstream.

Sorry, you can do everything right and still get a disease. Including Type II diabetes.

Marie July 14, 2014 at 11:38 am

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1526773/

“The recent global epidemic of T2DM almost certainly indicates the importance of environmental triggers such as sedentary lifestyle and dietary changes over last several decades. Nonetheless, T2DM is among many complex diseases for which a genetic contribution is well accepted.”

The Anti-Gnostic July 14, 2014 at 11:53 am

LOL. That paper is hilarious. “We’re sure it’s out there; we just haven’t found it yet!” Just need more government grants to pin down this elusive gene.

We can socialize the costs for sewer and potable water and that’s probably about it for (arguably) public goods in the sphere of health.

Marie July 14, 2014 at 12:05 pm

Wow, stubborn much?

Google it, this is not difficult info to find. You’ve simply been misinformed, like the majority of Americans.

This was in that highly inaccessible “Wikipedia” thing:

“Genes associated with developing type 2 diabetes, include TCF7L2, PPARG, FTO, KCNJ11,NOTCH2, WFS1, IGF2BP2, SLC30A8, JAZF1, HHEX among others.[4][5]KCNJ11 (potassium inwardly rectifying channel, subfamily J, member 11), encodes the islet ATP-sensitive potassium channel Kir6.2, and TCF7L2 (transcription factor 7–like 2) regulates proglucagon gene expression and thus the production of glucagon-like peptide-1.[6] In addition, there is also a mutation to the Islet Amyloid Polypeptide gene that results in an earlier onset, more severe, form of diabetes.[7][8]“

Marie July 14, 2014 at 10:33 am

@ZC,
The care my daughter gets for her chronic disease is worse post-ACA than it was pre-ACA. Just one situation, but I doubt it’s that atypical.

ZC July 14, 2014 at 10:50 am

Marie, is that from different networks (she had to switch doctors and her new doctor is lower-quality), coverage (the things she needed are no longer covered) or financial difficulty affording the same level of care? Just curious, since I saw your other comment in this thread about changing to Medicaid. I’m curious how many people are moving out of the individual market.

Marie July 14, 2014 at 11:04 am

Coverage.
We could have other problems, but her endo chooses to accept Medicaid even though he is already well overbooked, there is a serious shortage in this specialty.

To be fair, what is covered is entirely free, so we could shift the costs to the things that aren’t covered, in theory, on paper, and probably come out about even. But in the real world, it doesn’t work out so clearly.

One thing people don’t always consider is that the cost of health care items out of pocket is about twice what the cost is through an insurance company. So it’s not quite as simple as saying that if Medicaid doesn’t cover it we can buy it ourselves with what we save on premiums, since we are buying it at twice the price.

gabe July 14, 2014 at 11:16 am

The death panels have decided she is expendable. They are finally weeding out the bad genetics.

Marie July 14, 2014 at 11:57 am

@gabe,
The end . . . . . . … . ? (cue music!)

Jan July 14, 2014 at 4:49 pm

Re #2, probably someone did say that, but read the President’s remarks shortly after the law finally passed and tell me if you see something specific about improving health. He mentions almost all the goals and major provisions of the law. http://www.whitehouse.gov/the-press-office/remarks-president-affordable-care-act-and-new-patients-bill-rights

A lot of stuff was said during the ACA–every legislator had to talk about. Shall we go back and reassess the accuracy of all the statements from every member of the GOP about it as well? ;-)

Marie July 14, 2014 at 9:55 am

I think for the poor what you’re going to see is the new “gap”.

In our case we moved from buying our own insurance to going on Medicaid for the family.

What this means is we have more money in our pockets. At the same time, we don’t actually have enough money in our pockets to make up for the loss of care from moving to Medicaid.

So the question of whether ACA benefits the poor is a sticky one. Are you benefited if you have fewer costs but also less care?

Those who were uninsured before may face similar situations, which might explain the Oregon study. Psychology plays in, also. I have several things I’d love to go ask a doctor about, but I don’t want to use the Medicaid for myself (I’ll certainly use it for the kids, or the credit card). I can pay out of pocket, and ostensibly still be ahead since I’m not paying premiums and deductible. In fact, I might have to pay out of pocket since practices that take adult Medicaid patients are very, very limited. But will it end there? What if there are tests? What if there are referrals? What if some specialist doesn’t take Medicaid? I know from past deductibles and billing that if you don’t have insurance, a specialist initial visit can easily cost $600 for a half hour to an hour. Even though we’d technically still be ahead because we could say that we were paying that instead of X amount of premiums, it’s a huge chunk at once, and there’s no telling where it will end. That’s why we had insurance, to pay for those escalating unknown costs.

So if one of the health questions I’ve got comes to a head, I will probably end up in an ER anyway, with a condition farther along and more expensive to fix (unless I go the cheap route and just die). And at that point, we’ll certainly not be paying out of pocket.

It is complicated. And I’m sure the situation of every other “poor” person out there is specific to him or her. I don’t know how you would measure success under your definition considering all that.

Jan July 14, 2014 at 11:32 am

Less care?

Marie July 14, 2014 at 11:54 am

Less medical care.

Marie July 14, 2014 at 2:46 pm

Sorry, did you mean you’d measure success as being less care?

I don’t think anyone is trying to reduce care to the poor. I just think it’s sometimes an effect of other things people want to do.

Jan July 14, 2014 at 11:34 am

You’re saying you can’t see a specialist bc you’re on Medicaid?

Marie July 14, 2014 at 11:56 am

No, I’m saying what I said.

I don’t know if I could see a specialist or not. Do you?

I know that there are very few GPs I can see using Medicaid. One practice out of four in my county.

I can, of course, almost always see a specialist and pay out of pocket. But I doubt any will bill me later, particularly not after the first appointment.

I know I could see an ER doc if I had an emergency.

Jan July 14, 2014 at 5:06 pm

Sorry, did not read carefully. You’re saying that you don’t have enough money in your pockets to make up for the loss of care. What specific care did you lose? Medicaid is quite comprehensive and has hard limits on out of pocket costs for beneficiaries.

As I understand it, you are also saying that hypothetically you might need to see a specialist and you may not be able to because they don’t take Medicaid. Fair enough. I have ESI, a regular HMO, and I really don’t know if I could see a specialist either. Maybe neither of us could!

For what it is worth, Medicaid plans are required to adjust their rates to ensure a certain level of access, which you likely know. States can be sued for poor performance in this area, and I think it has happened for specific services, like children’s dental access, once or twice. So there is precedent for a real remedy.

I think your question of whether one benefits if they receive free care but less care misframes most people’s experience going on Medicaid. The Oregon Medicaid study showed that people had access to and used more care than before they went on the plan. They also felt less financial pressure–so presumably their out of pocket costs didn’t increase. Maybe it is tougher to access care in most other states, but from the data I’ve seen people are able to get care with Medicaid, though they may have to look a bit.

Also, are you in general hesitant to use Medicaid for yourself because you think you simply shouldn’t bill the taxpayers for your care? If so, you’re a super responsible beneficiary of public assistance, admirable.

Cliff July 14, 2014 at 11:59 am

So, the goal was to provide free health insurance to poor people, even though “we know” health insurance does nothing to improve health outcomes?? My mind is boggled.

We live in interesting times July 14, 2014 at 12:40 pm

No, it was redistribution and control.

ZC July 14, 2014 at 3:09 pm

No, we know that more/less generous healthcare does little to improve short-term health outcomes. The goal is to reduce the financial burden of care on the uninsured and increase their access to non-emergency care, in line with the access that the typical employer-insured worker has. Is that less mindboggling?

ZC July 14, 2014 at 3:19 pm

Rereading my comment, that part wasn’t well-written. The RAND study (http://www.rand.org/pubs/reports/R3055.html) was inconclusive about the effect of cheaper care on most health measures. That’s a weaker statement than what I said. I will stand by the idea that most of the gains in health from ACA will necessarily be long-term.

Z July 14, 2014 at 8:13 am

I suggest another metric. How many people, like me, are holding a cancellation letter in their hand at the moment? I just got mine on Friday. This is the third one since the lunatics decided to destroy the American health care system. The first one forced me to “upgrade” my policy to a more expensive one. The second one was rescinded when the nitwit in the White House got spooked by the public outcry. That temporary delay is now ending.

mulp July 14, 2014 at 12:42 pm

As if cancellations and stuff never happened before 2009 when Obama took office….

“3. Given that prices in the individual insurance market already seem to have gone up 14-28 percent, ….”

Before that “nitwit” took office, or perhaps its when THE nitwit took office in 2001, my insurance premiums increased from $3000 a year in 2002 to $9000 in 2008, with the policy I had in 2002 being cancelled because it was a group policy, and the best replacement with a $5000 deductible being much worse at $4500 with the same insurer, and then that same insurer hiking the premiums every year 8-10% without me ever making a claim. I had been continuously covered by employer or individual insurance from 1974 to 2011 and only once did the premium go down: 2011 as a result of the for-profit Anthem of NH being required to cut premiums so medical costs exceeded 60% of premiums – up to about 75% thanks to NH’s insurance regulator agreeing that BCBS could only survive if it had significant profits.

Marie July 14, 2014 at 1:02 pm

Did the cost of your insurance go up or did the cost to you go up?

Did your employer start off paying a large part of the premium and wind up paying little of it, or did you pay the whole premium the whole time?

I ask even though you seem to be well versed in what you’re talking about, because I often hear people say their premiums have done this or that and what they mean is their portion of the premiums.

In 2009, the cost of COBRA premiums for my whole family with a $3000 deductible was $1300 a month.

Also, health insurance through an employer isn’t like car insurance, they can’t raise your premiums as an individual based on claims. Most states, if not all, it was the law.

Z July 14, 2014 at 3:43 pm

I don’t know there bootlick. I went a long time without getting a cancellation letter explaining that ACA is forcing me to change policies. Since ACA, I’m on my third change. Of sure, I can now get my vagina flushed free of charge, but not having a vagina means it is not much a benefit.

But, you lunatics will not be deterred so there’s little point in engaging you. You’re determined to pull the roof down on all of us. The only hope is that a big beam crashes down on your head while the rest of us get out alive. Maybe we can rebuild from the rubble.

dead serious July 14, 2014 at 5:21 pm

You probably need to get that thing flushed more than a few times. It’s obvious you’ve had sand in it for a while now.

Craig Richardson July 14, 2014 at 8:22 am

Here is a health insurance price index that tracks daily trends since October 2013. Tyler references a report that uses 2012 data.

https://www.ehealthinsurance.com/affordable-care-act/price-index.

Prices seems to be stable, and down since Oct. 13.

Larry July 14, 2014 at 12:11 pm

Thanks for the link. I wish the graph had a longer timespan.

I’m paying less. Most individuals I’m aware of are paying more. They’re younger than I am. I make sure to thank them for picking up my tab whenever I can.

mulp July 14, 2014 at 1:04 pm

Kaiser has been tracking insurance since the 90s using the most comprehensive and largest block of covered people with the best data.

ACA basically provides individual access to the same kind of insurance that employers have been offering for decades, with limited PreX, no individual rating, no or limited age and gender discrimination, so kff.org provides a benchmark for premiums and coverage from 1999 to the present.

The latest report is from 10 months ago (so a new one will be coming in Aug-Sep) http://kff.org/report-section/2013-summary-of-findings/

“Employer-sponsored insurance covers about 149 million nonelderly people.1 To provide current information about employer-sponsored health benefits, the Kaiser Family Foundation (Kaiser) and the Health Research & Educational Trust (HRET) conduct an annual survey of nonfederal private and public employers with three or more workers. This is the fifteenth Kaiser/HRET survey and reflects employer sponsored health benefits in 2013.”

Individual policies are impossible to study because the pricing is not transparent, the policies have changed significantly over the past couple of decades so much they can’t be compared with earlier years or even between policies.

The biggest change in the individual market is from the change from non-profits with special State and Federal tax and regulatory privilege in exchange for being the insurer for everyone, no matter what, to total for profits which can deny coverage to anyone they want, requiring the State government become the insurer of last resort, either by offering insurance or when poverty is forced by medical costs, by Medicaid or public health services.

Marie July 14, 2014 at 1:17 pm

“Individual policies are impossible to study because the pricing is not transparent, the policies have changed significantly over the past couple of decades so much they can’t be compared with earlier years or even between policies.”

I don’t understand that.

ZC July 14, 2014 at 3:11 pm

Coverage of care is different, networks are different (and probably not well-recorded). The ability to price on observable characteristics has changed, too.

rayward July 14, 2014 at 8:39 am

For a possible outcome in the decades to come, I suggest we look at another sector in which the government intervened several decades ago in order to achieve greater equality of access: higher education. What we know is that the cost of higher education has ballooned, and with it so has student debt. On the “positive” side, more young people have access to higher education today and, as important, college teachers’ pay and benefits have gone way up. Whether the expansion of the higher education industry has made America more or less prosperous is debatable, but for those in the industry it has been a boon.

Jon Rodney July 14, 2014 at 10:23 am

“college teachers’ pay and benefits have gone way up”

… I think you’ll find the opposite is true.

Marie July 14, 2014 at 10:34 am

My read is that there are more administrative staff on campuses, that this is where a lot of the money goes.

Jon Rodney July 14, 2014 at 12:56 pm

I think that’s definitely part of it. A lot of money also seems to go into large capital projects (fancy dorms, stadiums, etc).

HL July 14, 2014 at 2:35 pm

Freshman life is vastly more comfortable than it was decades ago.

msgkings July 14, 2014 at 3:40 pm

+1 to HL, colleges compete on amenities now, with the price always rising.

andrew' July 14, 2014 at 8:42 am

I’m free to compare it to what I know is the solution or the right direction and know it is not. I also can look at the propagandist arguments and show them to be falsehoods.

prior_approval July 14, 2014 at 9:20 am

‘How will we know if the ACA is working?’

Well, considering that the only way to improve ACA is to replace it with any one of the other models used for essentially universal health care in any other industrial nation that cost at least a third less, with comparable (or better) results, the answer would seem to be that ACA was a failure from the beginning, unless it was merely a step on a road to improving the American health care system.

A road involving ACA’s necessary consignment to the dustbin of history.

Terry July 14, 2014 at 12:06 pm

Why it is so hard to come up with criteria by which to measure trends in health care costs (aside from one political side wanting to say anything to make it appear the other side is wrong)?

I’ve thought right along that a goal should be to get the cost of health care down from %20 of GDP (or so) to the 10% (or so) cost to the economies with which we compete, and which have mostly better health care outcomes than we are getting for what we pay. That’s simple economics: when you’re in business, you need to be able to compete.

One way to do that is to reduce demand, which would be easy: stop paying for health care for those who can’t afford it (e.g. Medicaid, mandated care for anyone who shows up in the ER, subsidies for ACA). Charities, sure. Governmental programs, no. Eliminating mandatory employer-provided health care would make most health care too expensive for the working poor, and probably half of the middle class, what’s left of it. So perhaps 60% of us would not be able to afford more than minimal health care, demand would be lower, and prices would have to go down (if the healthcare market had any resemblance to a free market).

A middle ground would be to concentrate on tort reform to reduce costs to providers, and get more people into healthcare savings accounts, and otherwise let the states and the insurance markets affect outcomes. I can’t think of any way this would reduce the cost of health care as a percentage of GDP, nor would it improve health care outcomes to the level of the other countries with which we compete.

The other option is to adopt some variation on the “universal health care” (single payer) found in those countries we currently compete with.

The ACA will probably fail because it increases demand, while doing almost nothing about costs. It reduces costs to the middle class and working poor by providing subsidies, and for those in poverty by increasing availability of Medicaid, but that simply means that a lot of the higher costs come out of a different pocket (the government), but still add up to the 20% of GDP that is the main problem. Add to that the federal deficit (where some or all of the subsidies come from), and it just means a bad problem is getting worse.

There’s a simple answer to the “jobs” question: instead of mandating that employers contract with insurance companies to provide ever more expensive healthcare, mandate that employers pay for whatever insurance the employee selects through payroll deduction out of pre-tax dollars. That solves any issue of “lock”, since employees would be able to take whatever insurance plan they decide on to a new employer. It also solves the Hobby Lobby question, since the employer would simply be passing the employee’s money on to the insurance company. The marginal cost of adding a new employee’s deductions should be about zero, so cost of health insurance would no longer have any rational impact on employer’s decisions. (Whether individuals choose not to work might have some academic interest, but should not concern us overmuch.)

Since there is an easy answer to the unemployment issue (if there is one) increased unemployment per se is moot.

So what is left?

– universal health care, at least compared to the countries with which we compete
– cost, in %GDP, compared to countries with which we compete
– health care outcomes (availability of advanced procedures, waiting times, spread of illnesses that could be controlled by vaccines, life expectancy, fitness for work, etc) compared with countries with which we compete

This assumes that we as a country are competing with other countries with advanced economies and healthy citizens. If we make the political decision that we are competing with developing countries where the average wage is $1 a day and most people can’t afford health care, then the analysis changes drastically. Or perhaps we make the political decision that the government should stay out of health care decisions, mandates, and outcomes, and the %GDP competition is completely irrelevent.

But those are the rational arguments. Our political masters have, in their “wisdom”, forced us to choose between the ACA and repeal of the ACA, which have almost nothing to do with any of those arguments or criteria. The only way to move toward a rational analysis is to force the politics toward rationality, which is unlikely to happen…

The Anti-Gnostic July 14, 2014 at 12:32 pm

I’m surprised nobody talks about comprehensive tort reform in conjunction with socializing medical care. Bottom line, you can afford a tort system or you can afford a comp system; you can’t afford both. No country with socialized medical care allows the US’s open-ended “pain and suffering” awards. If medical care is socialized, then a lot of lawyers and “pain clinics” need to go out of business.

derek July 14, 2014 at 11:22 pm

Or the option of a second opinion.

dead serious July 15, 2014 at 7:58 am

Co-sign. This has the added benefit of cutting out high practitioner insurance costs, lowering the costs of medical care further.

Yancey Ward July 14, 2014 at 9:38 am

I wouldn’t hazard a guess about spending until the last GDP report just before the November election is released. My suspicion is that some 1st quarter GDP will quietly be shuffled into that quarter.

Andrew' July 14, 2014 at 10:16 am

Wouldn’t it be AFTER the election? And Democrats are elected, then it will have worked.

T. Shaw July 14, 2014 at 2:07 pm

Correct.

You will know that ACA is working when the Dems control both houses of Congress, the White House and the Supreme Court in perpetuity.

It’s not about economics. It’s not about reform of health care delivery. It’s about politics which are essentiallly deceit and coercion.

Marie July 15, 2014 at 12:57 am

“You will know that ACA is working when the Dems control both houses of Congress, the White House and the Supreme Court in perpetuity. ”

Ouch. That was succinct.

John smith July 14, 2014 at 9:40 am

@ zc

Your logic is terrible.

You are essentially saying is that if somebody would work absent govt subsidy but chooses not to work with a govt subsidy, we are better off with the subsidy.

Clearly the individual is better off. But society is not.

This is basic econ 101.

Hold head in despair…

byomtov July 14, 2014 at 9:59 am

No. There need not be a government subsidy involved. There need only be insurance available to an individual purchaser at a price comparable to that charged for group policies.

IOW, the dysfunctional nature of the individual market needs to change.

Andrew' July 14, 2014 at 10:18 am

1. Do what nearly unanimous economists believe and work to reduce the employer linkage.
and/or
2. Don’t make it even worse.

ZC July 14, 2014 at 10:11 am

What? The argument here is that someone locked into a job might otherwise have time to search for a better one. Not only that, but their job will presumably go to someone else looking for a job. It’s not econ 101 (certainly not any econ 101 I ever taught). It’s a lot more complicated.

Additionally, those who have the highest incidence of job lock are usually going to have relatively low incomes, so this effect is obviously a redistributing one. Some redistributions come with efficiency trade-offs.

John smith July 14, 2014 at 9:40 am

@ zc

Your logic is terrible.

@ Zc

You are essentially saying is that if somebody would work absent govt subsidy but chooses not to work with a govt subsidy, we are better off with the subsidy.

Clearly the individual is better off. But society is not.

This is basic econ 101.

Hold head in despair…

mavery July 14, 2014 at 10:44 am

He’s saying that the individual is better off, not that “we” are better of. And if the point of the legislation was explicitly to help such individuals, then this would be a clear case of it working.

Andrew' July 14, 2014 at 11:42 am

AND it is not the same thing as voluntary unemployment.

Andrew' July 14, 2014 at 11:43 am

(and of course the totality of the legislation was not advertized as helping only the small minority of people that it helps even less than supporters are trying to have us believe.)

Lord July 14, 2014 at 9:57 am

1 Employment will have risen. Yes, some, the most ill will cease working, but the need for others to work more will dominate. (Economists always get this wrong.) The incentives will exist, but the contrary incentives will be even greater.
2 It will have improved but not noticeably. Prenatal is the most likely area to see improvement but this will be delayed until more states take up medicaid expansion.
3 A slight improvement but only because the most significant improvements, not having to worry about lack of coverage, is excluded from analysis.
4 It will initially decrease spending by focusing it on more efficient narrow channels. Over time those channels will increase prices to broaden the channels to support more growth but others will enter offering narrower channels keeping prices contained until the insured actually want to spend more and can actually see the benefits of more expensive plans. Narrow networks are good, offering real competition from the most efficient providers, but will eventually become bad, offering substandard care from poor providers.
5 It is permanent in the sense of delayed increases delay them forever, is not due to the slow economy, the slow economy increases costs rather than decreasing them and a better economy will allow more production without much increase in costs. This is due both to the ACA and long term trends (the ACA can be considered part of this trend), what can’t go up forever won’t and the focus on efficiency will be here for some years until effectiveness is shown to diminish.

R Richard Schweitzer July 14, 2014 at 10:03 am

The headline question is misstated:
the enumerated questions clearly ask:

What Is the ACA doing (or causing) to the economy, to the conditions of employment, to the availability or reduction of choices in healthcare, to the structure of the private contract nature of healthcare and insurance contracts, etc., etc.

the real examination must consider the changes in conditions and relationships that both an enforcement and non-enforcement, as well as waivers and exemptions and other arbitrary actions are generating, and will potentially generate.

Amongst the changes in employment relationships is the increase in part-time employment. There is also the psychological change in the relationship as an employee comes to be weighed as much (or more) as a “cost item,” than a productive asset and necessary participant in a social arrangement.

There is much more, of course.

Boonton July 15, 2014 at 5:25 pm

There is also the psychological change in the relationship as an employee comes to be weighed as much (or more) as a “cost item,” than a productive asset and necessary participant in a social arrangement.

So pre-ACA companies didn’t try to ask themselves questions like “how much value do our workers produce and how does that compare to what we pay to have them?”?

Satish July 14, 2014 at 10:43 am

I think you should revisit some of the pronouncements you made earlier. Bayesian revisions, bets and all that.

http://marginalrevolution.com/marginalrevolution/2013/10/what-is-the-most-likely-path-forward-for-the-aca-exchanges

Bill July 14, 2014 at 10:54 am

MR Alzheimer Control Test

Remember last year when Tyler said that the ACA would be raising the price for healthcare because there would be more people getting services?

Remember the most recent GDP report which showed that healthcare spending was going down?

Andrew' July 14, 2014 at 11:44 am

Bill,

Are you being serious?

Andrew' July 14, 2014 at 11:46 am

“Remember when Robert Shiller (chosen because you guys might actually accept such an appeal to authority) said stocks were priced to fall or be flat…but hahaha, they are up so far this morning!”

Andrew' July 14, 2014 at 11:56 am

Or, as posted above:
http://www.newrepublic.com/blog/plank/104791/gruber-care-act-job-killing
Jonathan Gruber:
“These newly insured individuals will demand more medical care than when they were uninsured. And while it takes many years to train a family physician or nurse practitioner, it doesn’t take much time to train the assistants and technicians (and related support staff) who can fill much of this need. In many cases, these are precisely the sort of medium-skill jobs that our economy desperately needs—and that the health care sector has already been providing, even during the recession.”

That is Jonathan Gruber saying, while not very clearly of course, healthcare spending will increase if somewhat offset by the recession.

The short-term reductions are from the recession. The long-term reductions from ACA are expected, by the one guy you guys believe, to be in the future AFTER increases.

Andrew' July 14, 2014 at 11:58 am

Tyler, BTW, is just asking the question. Gruber is the one claiming he knows what you are making fun of.

Jan July 14, 2014 at 5:18 pm

That’s not what that says.

Bill July 14, 2014 at 1:21 pm

Andrew, I am being serious.

Dave Barnes July 14, 2014 at 11:45 am

How will we know if the ACA is working?

Republican heads will explode.

dan1111 July 14, 2014 at 12:14 pm

That would make American health outcomes much worse.

msgkings July 14, 2014 at 3:46 pm

But average American IQ much higher (ba dump bump…too easy…and I don’t actually think Reps are dumb)

yang July 14, 2014 at 11:46 am

Liberal fascism for the win!

pcm4 July 14, 2014 at 12:09 pm

How will we know if the ACA is working?

See how many people are uninsured. Wasn’t the entire point of the law to expand coverage to the uninsured?

Andrew' July 14, 2014 at 12:24 pm

No. Of course not. Are you being serious?

That may be the point now. Although it’s not even doing that great job at that if that is the entire point anyway.

Andrew' July 14, 2014 at 12:28 pm

For example, if that were the entire point, it would have been done entirely differently and MUCH more effectively at THAT objective. So yeah, no.

pcm4 July 14, 2014 at 3:25 pm

Considering that was the purpose of the law it is based on (Romney’s legislation in Mass.). I am not kidding. Politicians can talk all they want about bending the cost curve, but if you look at the actual meat of the bill there is way more about expanding coverage (exchanges, individual mandate, medicaid expansion) than anything about cost control.

Willitts July 14, 2014 at 8:13 pm

Indeed the goal was to expand coverage, but to do so in a sustainable fashion. And that could only happen if average costs are lowered. One could trivially provide universal coverage with a completely empty promise to pay from the treasury. One could trivially cut costs by defunding the programs.

The burden is on the proponents of the plan to demonstrate its success, and that measure includes coverage, quality, wait time and cost objectives.

Jan July 14, 2014 at 5:20 pm

See Obama’s remarks at time of passage. http://www.whitehouse.gov/the-press-office/remarks-president-affordable-care-act-and-new-patients-bill-rights Says an awful lot about expanding coverage! (But Obama is just a liar and has other motives for everything, the meanie.)

Larry July 14, 2014 at 12:15 pm

ACA has so many pieces and parts that it is very difficult to comprehend. And the waivers and exemptions have been so widespread that it makes the whole thing even more of a head scratcher.

One perhaps unintended consequence is the ongoing fall in the new business formation and a larger shift from small to large business. This has in part been driven by the regulatory surge in the Obama era. Running a small business is getting more and more complicated as the number and complexity of regulations increase. One clue that the slowdown is regulatorily-influenced is the relatively higher growth in releatively less-regulated states. One new analysis indicates that regulations are a bigger problem for small business than taxes!

Andrew' July 14, 2014 at 12:26 pm

http://www.latimes.com/nation/la-na-insurance-bailout-20140521-story.html#page=1

And of course Obama is gaming the analysis by, for example, promising to pay insurers to keep rates low in the short-term. We don’t know how much total effect this has, and good luck figuring it out, but the fact that Obama is holding a taxpayer-funded option on gaming Obamacare result statistics tells us all we need to know.

mavery July 14, 2014 at 12:26 pm

Aren’t you temporarily exempt from ACA up to like a couple hundred employees and permanently exempt at less than 50? I could see an argument about an impact on small businesses growing but not on formation.

We live in interesting times July 14, 2014 at 12:42 pm

Bug or feature?

Bill July 14, 2014 at 7:05 pm

Larry, Please identify the “less regulated” states which you claim have higher growth rates. Once you name them, I will link you to a map showing growth rates.

Hint: Red doesn’t look good.

David C July 14, 2014 at 1:19 pm

To answer the headline question – When Republicans start taking credit for it.

dead serious July 14, 2014 at 3:21 pm

I have a better suggestion: Republicans identify some time frame when it’s fair to measure the effects: 2 years from now? 5 years from now? Then the CBO does a full analysis and we argue over the metrics then.

Until that time, this is an argument based on speculation and polemics. I’m out.

Albert July 14, 2014 at 7:10 pm

You will constantly read stories about the long wait times for routine interventions.

And extremely, extremely long wait times in Emergency rooms.

Just like everywhere else that socialized health care has been implemented.

Willitts July 14, 2014 at 8:06 pm

I’m mostly disappointed by these comments.

byomtov July 14, 2014 at 8:09 pm

Silly question.

There’s no such thing as “working” without a definition of that word.

Without stating some definition, you are free to argue that it is not working as long as youcan show some negative effect. Of course, for some that’s a feature, not a bug.

Erik M. July 14, 2014 at 11:18 pm

Is it so easy to talk about “how much employment itself boosts health”? I doubt these cases are equivalent:

1 – finding a white-collar job at age 24 instead of remaining unemployed
2 – staying home to raise young children at age 30 instead of continuing to work full-time
3 – taking a job in a hazardous industry at age 46 instead of keeping house for a working spouse
4 – retiring at age 60 instead of continuing to work

I also wonder if having a non-working adult in a household could improve the health of working adults in the same household, perhaps by reducing the number of hours they need to devote to unpaid work.

I am sure you know more about this than I do and would be glad to be shown why I am wrong.

Marie July 15, 2014 at 1:06 am

I think moderns have a tendency to read “working” as “under paid employment”, even when they know better. It’s almost a habit.

Steko July 15, 2014 at 1:17 am

You’ll know it’s working by following outlets like The Weekly Standard. When for years you’ve been hearing about how, as Jonathan Chait put it, “our brave troops are marching toward the enemy capital and will soon complete a glorious victory. Then, after a while, there’s no glorious victory, but you start reading about how our brave troops are inflicting heavy losses on the enemy as they courageously defend the motherland.”

Steko July 15, 2014 at 1:23 am

That is from the all time classic, Fred Barnes Again Sees Glorious People’s Victory At Hand at TNR [1]. Chait recently went back to mine the vein again by recounting successive posts from Reason’s Peter Suderman:

“We have gone from learning that the law has failed to cover anybody to learning it would cover a couple million to learning it would cover a few million to learning that it has probably insured fewer than 20 million people halfway through year one. The message of every individual dispatch is a confident prediction of the hated enemy’s demise, yet the terms described in each, taken together, tell the story of retreat. The enemy’s invasion fleet has been destroyed; its huge losses on the field of battle have left it on the brink of surrender; the enemy soldiers will be slaughtered by our brave civilian defenders as they attempt to enter the capital; the resistance will triumph! ”

[1] http://www.newrepublic.com/blog/the-plank/the-weekly-standard-where-its-always-good-news-republicans
[2] http://nymag.com/daily/intelligencer/2014/07/libertarian-accidentally-shows-obamacare-success.html

Tom July 15, 2014 at 1:45 am

These are all fair questions, but even if we could answer them that probably wouldn’t bring us any closer to a consensus on whether ACA is “working”. What works for me and my concept of progress very likely doesn’t work for you and yours. Personally I’d like to see a single-payer system serving the masses with an opt-out for private insurance.

I’m sure is anathema for TC and most MR commenters who seem generally convinced that Europe lives in health care hell and our system is the greatest on earth. But I think more people should be concerned by the cost to our competitiveness that derives from spending a 50-100% bigger share of our GDP on healthcare than any other advanced economy, and I find the claims that our system is providing higher service levels in line with those higher costs unconvincing and I’ve noticed a strong correlation between making those claims and lack of European experience.

So the ACA will have worked for me if it turns out to be a transitional stage that smooths the way to single-payer. In that respect its one clear success is the expansion of Medicaid. As for the exchanges, still way too early to call.

Stan July 15, 2014 at 7:21 am

Maybe I read this post too quickly, but I didn’t see much comment about the medical effects stemming from passage of the Affordable Care Act. My criteria for whether the ACA is working is whether it decreases infant mortality, increases life expectancy, and improves the quality of life for the poorer half of the country. I’d take Tyler more seriously as a social commentator if he addressed these issues.

Lonely Libertarian July 15, 2014 at 5:45 pm

What makes you think it can or will do ANY of these?

Not sure many of the Wonks think these are going to happen in any meaningful/measurable way…

And I am not sure Tyler considers himself a “social commentator” – but he can speak for himself on that…

Boonton July 15, 2014 at 7:05 pm

Not sure I’d agree with this. Suppose the long run data shows that the ACA broadens health care coverage, modestly lowered costs and funded some innovative ways to tie payment to actual working treatments but despite all that overall health metrics like infant mortality didn’t move due to the ACA. I’d consider that a success.

Anon Ymous July 17, 2014 at 1:13 am
Floccina July 17, 2014 at 3:18 pm

Perhaps the employer mandate will be eliminated permanently along with the birth control mandate. If that happens the ACA will not be bad from a classical liberal point of view.

The Women's Health Blog July 22, 2014 at 6:06 pm

Great information. Lucky me I ran across your site by chance (stumbleupon).
I’ve saved it for later!

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