Will ObamaCare Reduce the Number of Uninsured People?
By David Henderson
In two words, not necessarily. In four words: “We simply don’t know.”
Greg Scandlen walks us through the reasoning here. The whole thing is worth reading.
The Congressional Budget Office is more constrained, but even they have upped their estimate of the number of workers losing coverage from a mere 3 million a few years ago to 7 million just last month.
The CBO number is almost certainly a gross under-estimate. CBO’s ability to predict the future has long been constrained by two things:
It is required to assume that current law will be in effect in the future. So, for example, its budget predictions always assume that the SGR cuts in physician payments will actually occur. But that never happens, so the predictions are never accurate.
It tends to use “static scoring,” which means it assumes that current behavior will be unchanged by new incentives. In this case it issued a 30-page justification for its estimate. As an example, part of that report said −
The fact that many firms currently offer health insurance coverage to their workers despite the high cost of premiums and rapid growth in those premiums for many years shows that many firms continue to find health insurance coverage to be a worthwhile element of their compensation packages. If firms could have attracted employees more cheaply by dropping health benefits and adding wages or other benefits that cost less, then they would have done so.
Good grief! This is about as shallow as you can get. Firms have been offering coverage despite the high cost because there has been no viable alternative, and they feel an obligation to ensure their workers can get coverage. The whole point of ObamaCare is to provide an alternative! Companies will now feel free to drop coverage in the belief that workers will now be able to get good coverage through the exchanges.
It’s this last statement that leads me to “We simply don’t know.” On the one hand, Scandlen is probably right that many employers will drop coverage because they think that their workers can get good–and heavily subsidized–coverage through the exchanges. On the other hand, my gut feel is that it won’t be good coverage. So will some employers who dropped coverage start it again? We don’t know. The equilibrium result is hard to know.
Nancy Pelosi famously said “we have to pass the bill so that you can find out what is in it.” Well, we’re finding out and we’re still not sure.
Here’s my pretty confident prediction, though: it will be a mess.