ObamaCare: failure at any price

It was rather refreshing to see the very brief return of cost/benefit analysis to the American Left during the Ebola crisis.  You had to listen carefully to hear it, but the muddled arguments against imposing a travel ban on the West African outbreak nations boiled down to an assertion that the safety benefits would not be worth the costs, which would be paid primarily by inconvenienced West Africans, whose prosperity America was held vaguely responsible for, because slavery.


It’s quite reasonable to measure cost against benefits, but the Left hates doing it, because many of their ideas look less attractive – if not downright absurd – when such calculations are made.  Much of modern politics can be thought of as the art of promising benefits without regard to cost.  If necessary, cost gets straitjacketed and locked in a closet until the political discussion is over.  The related subject of exactly who covers the cost, and how that group overlaps with who gets the benefits, is considered extremely rude to bring up.  Politicians are very generous with other peoples’ money.  No one is more gregarious than the liberal politician who has never, in his life, been forced to make a business payroll, but is eager to burden those who do with minimum wage increases.

All sorts of ideas are palatable to the American electorate only because they don’t think about the cost.  (The belief that the Evil Rich can cover those costs out of loose change from their treasure vaults is another way of ignoring cost, because people who think that way are convinced looting the rich is a “soft” crime – they’re not really injured by confiscatory taxation, because they have plenty of money to spare.)  For example, no Big Government enthusiast likes to talk about the way rising fuel-efficiency standards for automobiles kill people, but it is undeniably true – the fatality rates for traffic accidents rise as cars get smaller and lighter.  It’s a trade-off, and such standards have benefits, ranging from consumer savings on gas to environmental benefits, but nobody wants to think about those benefits in terms of human lives lost.


ObamaCare is a fantastic example of how abject failure can be portrayed as success, provided the costs are completely ignored.  In this case, people who complain about their personal costs – rising insurance premiums, lost access to doctors – are actively muzzled.  It’s infuriating, but also undeniably amusing, to watch ObamaCare apologists claim that if you just ignore everyone injured by the program, and count only those who seem pleased with it, it looks like it’s working.  It’s hard to imagine an enterprise that wouldn’t look good under that kind of analysis.

But even the sole metric of “success” ObamaCare defenders can point to, the number of people who gained insurance coverage under the program, does not hold up well under scrutiny, and it falls apart like wet tissue paper when measured against the cost of the program.  Edmund Haislmaier and Drew Gonshorowski took a look at those enrollment figures at the Heritage Foundation’s Daily Signal, using numbers for the second quarter of 2014 that captured enrollments delayed by what they delicately describe as “numerous problems experienced by the exchanges,” and concluded that the vast majority of “ObamaCare enrollments” are actually Medicaid enrollments.  Furthermore, the net number of people who gained new insurance under the Affordable Care Act is far smaller than the numbers bandied about by the Administration and its apologists, because most of them are people who found out the hard way that President Obama was lying when he promised they could keep their old insurance plans:


Our analysis of the data is reported in more detail in our latest paper, but our key findings are that in the first half of 2014:

  • Enrollment in individual-market plans (both on and off the exchanges) increased by 6,254,564 individuals.
  • Enrollment in private employer-sponsored group plans declined by 3,788,978 individuals.
  • In the states implementing the Obamacare Medicaid expansion, enrollment in Medicaid grew by 5,716,977 individuals.
  • In the states not implementing the Obamacare Medicaid expansion, enrollment in Medicaid grew by 355,674 individuals.

Applying a little arithmetic to those four key data points yields the following observations:

  1. The drop in employment-based coverage offset 61 percent of the gains in individual-market coverage, for a net increase in private-sector coverage of 2,465,586 individuals.
  2. Total Medicaid enrollment increased by 6,072,651 individuals, with 94 percent of that growth occurring in the states that adopted the Obamacare Medicaid expansion.
  3. The total, net increase in health insurance coverage (private-market and Medicaid combined) during the first half of 2014 was 8,538,237 individuals, but 71 percent of that coverage gain was attributable to Obamacare expanding Medicaid to able-bodied, working-age adults

Thus, while most of the attention this year focused on the new health insurance exchanges, the data indicate that a significant share of exchange enrollments were likely the result of a substitution effect—meaning that most of those who enrolled in new coverage through the exchanges already had coverage through an individual-market or employer-group plan.

Given that increased enrollment in Medicaid accounted for 71 percent of the net growth in health insurance coverage during the first half of 2014, the inescapable conclusion is that, at least when it comes to covering the uninsured, Obamacare so far is mainly a simple expansion of Medicaid.


Which is something the American people should have been given an honest opportunity to debate, but Obama and his allies were too busy blowing smoke about a brilliant technocratic reinvention of the insurance industry, under the wise guiding hand of the omni-competent State… okay, stop laughing, that’s what these people really believe, and they made you pay for it.

They made you pay a lot for it.  That train wreck of an ObamaCare website ended up costing us nearly $2 billion altogether.  (Wouldn’t you have preferred the Department of Health and Human Services to spend that money on oh, say, Ebola preparedness instead?)  The cost of Medicaid rose from $265 billion to $305 billion in just the first year of fully-functional ObamaCare, and it’s projected to double over the coming decade.  Subsidies for non-Medicaid enrollees were $17 billion in ObamaCare Year One, but they’re projected by the Congressional Budget Office to soar 800 percent within ten years.  “The combined $707 billion that the federal government will spend on Medicaid and ObamaCare subsidies in 2024 is roughly equal to the $716 billion the CBO estimates the government will spend on national defense that year,” CNS News tartly observes.

Meanwhile, insurance premiums are rising by so much that the numbers had to be kept secret from the American people until after the midterm elections, and insurance deductibles have gotten so out of hand under ObamaCare that many of its “enrollees” are afraid to use their “benefits.”  Many of them end up doing exactly what ObamaCare was supposed to prevent people from doing: marching into hospital emergency rooms to get “free” care.  The huge constellation of new taxes swirling around ObamaCare will drain more money from the private sector in various ways; the widely hated medical-device tax has been credited with killing over 30,000 jobs all by itself, and is so toxic that a couple of weeks ago, Hillary Clinton spent a full five minutes stammering nonsense to avoid answering a question about whether she would support repealing it.


That all adds up to a huge amount of money confiscated, and wealth destroyed, in the service of ObamaCare.  Arguments will rage forever about how much health care spending would have risen without the program, and how many peripheral costs should be figured into the total bill.  (Let us postulate that if you’re one of the people who lost his job because of the medical device tax, you probably take a dimmer view of ObamaCare than a previously uninsured person with pre-existing conditions who now has a health-insurance policy, 80 percent of which is paid for by other people.)

But look at those enrollment numbers from the Daily Signal again.  6.3 million people bought policies, but 3.8 million lost the insurance they used to have – a net increase of a paltry 2.5 million paying customers.  How can anyone argue that the immense cost to the American people as a whole – to say nothing of the burden placed on countless People Who Work Hard and Play By the Rules who got sandbagged by insurance cancellations and premium hikes – justifies such a modest achievement?  And that’s without getting into customer satisfaction, which isn’t great for ObamaCare, even among the previously uninsured.  Medicaid is not well-loved by its beneficiaries, either, which is something we should have discussed at length before shoveling another 6 million people into a program with chronic fiscal problems.


Forget about the cost, and ObamaCare, like many other government programs, looks a lot better.. which is why you should never, ever forget about the cost.


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