Obamacare Will Hurt the Poor and the Elderly

John Boehner says Obamacare is the law of the land, and he’s right. At this point, there is no reasonable prospect that it will be repealed before its full implementation in 2014. At that point, there will be huge additional classes of people dependent on federal subsidies to either (A) be covered by Medicaid or (B) buy health insurance in government-organized markets. 

If it is an unpopular program now, in 2014 it will become much more popular with the folks receiving these subsidies. Like Social Security and Medicare, Obamacare clients will come to view it as a right or an entitlement. Anyone who argues for its repeal will be portrayed as a heartless ogre. This is a political reality and Boehner is smart to come to terms with it.

That said, there is one key, politically salient difference between Obamacare and the New Deal/Great Society entitlements: Obamacare creates losers who will be politically impossible to ignore for both Democrats and Republicans alike. This is a complicated subject, but here I’ll focus on two groups of people that will be harmed.

1. The elderly will be hurt – Obamacare cuts a substantial amount of money out of future Medicare expenditures. This is the famous $700 billion cut that go so much attention during the election season. The main way that cuts will be made will be through the newly created Independent Payment Advisory Board (IPAB). Given the constraints that body faces, the most likely strategies they will employ include cutting Medicare Advantage and sharply cutting payments to doctors. For the elderly, the latter will mean that Medicare will become more like Medicaid (the government health insurance program for the poor), as fewer doctors will agree to see Medicare patients. 

2.  The poor will be hurt – People who are currently insured through Medicaid often cannot find a doctor who will see them. Even if they can find a doctor who takes Medicaid, they face long waits for scheduled care. This is one of the reasons that emergency rooms are so often crowded — they are the only place where Medicaid patients can be guaranteed to see a doctor. Obamacare will greatly expand Medicaid enrollment (by 20+ million people) to the near-poor, but it will do nothing to expand the supply of doctors caring for those patients. This will make it even harder for the poor to find care.

There are others who will be hurt — federal taxpayers and small business owners for instance — but this post is already too long. Democrats will pretend the elderly won’t be hurt. They will respond to the harm to the poor by pushing for expanded funding for Medicaid. Republicans have had mixed success with pointing out the harm to the elderly. Can they make a politically effective, conservative argument about the harm caused to the poor?

  1. David Williamson

    Err, no.

    It will also hurt the young, because it will make it even harder for them to find (full-time) jobs – but I have no sympathy for ‘em – they voted for it, without realizing what was in it – they thought they were getting free health insurance.

  2. Jay Bhattacharya
    C
    David Williamson: Err, no.

    It will also hurt the young, because it will make it even harder for them to find (full-time) jobs – but I have no sympathy for ‘em – they voted for it, without realizing what was in it – they thought they were getting free health insurance. · 2 minutes ago

    David, you’re right of course about the young.  An additional reason they will be harmed is that they will be forced (through the mandate/tax) to subsidize insurance for older people.  A politically competent conservative party would be able to take advantage of the harm caused to all of these groups.

  3. Paul Dougherty

    Everyone will be hurt. We just won’t realize it. Life, regardless of political system, has a level hurt associated. The Affrodable Care Act will blennd into the sea of all other hurts. When questioned about its effect the response will be “You think it is bad now, think of the disaster without it!”. Tidy, effective and unassailable.

  4. Mark Wilson

    The other day my physical therapist told me, “Obamacare is gonna kill us.”  He said they had already received letters from the insurance companies stating they plan to reduce their payments for services by 30-40%.  So either the patient is going to pick up the difference, or his small business is going out of business.

    There’s your cost savings.

  5. AUMom

    My brother is the VP of operations in a rural regional hospital that serves three counties. He does not believe they will be in business in five years. The closest hospitals will be three hours away.

  6. Lavaux

    Every demographic group whose majority voted to reelect Obama should be hurt by doing so. ObamaCare will do precisely that. In this respect alone it is a well-conceived and drafted law.

    Wanna solve Social Security and Medicare deficits? Give IPAB the power to deny compensation to all health care providers for services rendered to patients over 70 that do not lead to death within three months of performance. Kills two birds with one stone, so to speak.

    Yeah, big government… gotta love it. It’s got the power to give you everything you want and take everything you have, including your life. Seems to me this is why life comes first in the foundational formulation of “Life, Liberty And the Pursuit of Happiness.”

  7. Mothership_Greg

    For the elderly, the latter will mean that Medicare will become more like Medicaid (the government health insurance program for the poor), as fewer doctors will agree to see Medicare patients.

    The feds can require all doctors to see Medicare patients, as a condition of doing business in the USA.  This won’t happen until after a “crisis” of massive opt-outs from Medicare, but this entirely predictable problem will not be allowed to go to waste.  And when I say “doctors” I of course mean “health care professionals”.

    The first round of healthcare “reform” involved the insurance companies being made out to be evil, and then the government forcing people to buy insurance from said evil insurance companies.  The second round will involve demonizing the greedy selfish doctors who are refusing to see the poor and elderly.  We’ll see if the doctors organizations go along with this, as the insurance companies went along with greater government control, er, “oversight” in exchange for their promised captive patrons.  Politically, I don’t see this ending well for the Democrats, since they wholly own the PPACA.  We’ll see sometime between October 2013-April 2014.

  8. Southern Pessimist

    MG, your analysis is spot on but you are too optimistic. Democrats will ruin the practice of medicine and destroy the relationship between patient and doctor and it will be the doctors’ fault, They are all Republicans after all.

  9. Mendel

    Building on what So. Pessimist says, I think we should start planning an education campaign.

    Dr. Bhattacharya is obviously right that many people will be hurt by Obamacare.  But there are two ways to be hurt: directly and indirectly.  Directly includes doctors who won’t accept Medicare patients, higher taxes, the individual mandate penalty, etc.  It should be feasible to demonstrate to the public that these negative consequences result directly from Obamacare.

    More insidious are fewer total doctors, fewer small businesses hiring (to avoid going over the minimum number of employees), longer waiting lines, less personal care, etc.  These are the types of problems the Democrats always try to pin on the immediate source while distracting from the root cause (that they themselves created).

    We still have a few years to educate the public.  Perhaps making a concise list of predictions about the negative effects of Obamacare post-2014 might make it more difficult for Democrats to prevaricate when they start coming true.

    Or maybe not.  This is the American public, after all.

  10. Mothership_Greg

    I must confess that I will take some pleasure in watching the progressive healthcare bureaucrats’ utopian fantasy crash and burn.  The idea that some pencil-pushing pantsuit wearing ninnies in Washington know better than individual doctors how to treat their individual patients, because of all that nasty “cowboy medicine” and avoidance of “best practices” fills me with disgust and rage.

    It’s a shame the Republicans spent so much political capital on the individual mandate, which, although unpopular and unconstitutional IMHO, is not nearly as ludicrous as the notion that the PPACA will somehow magically get millions of people insured, yet will also save money through increased “efficiency”.  Wanting to get everyone insured is a nice idea.  Pretending that it will not cost money is insane.  If the Democrats had explicitly said “we want to get everyone insured, and to do so, we will need to raise taxes”, the PPACA would never have passed.  The magical thinking created by the introduction of a third party payer never ceases to amaze me.  I certainly am glad that Catholic hospitals don’t have to directly pay for sterilization for their employees, though.  Madness.

  11. Zafar

    OR, these businesses will respond to market signals and start providing the service at a more competitive price.

    Which is what happened in Australia with the advent of a single payer universal insurer.  Australia, btw, spends 9% of GDP on universal health insurance providing an excellent level of care and generally not bankrupting anybody.  The US spends 18% of GDP on healthcare.

    Mark Wilson: The other day my physical therapist told me, “Obamacare is gonna kill us.”  He said they had already received letters from the insurance companies stating they plan to reduce their payments for services by 30-40%.  So either the patient is going to pick up the difference, or his small business is going out of business.

    There’s your cost savings. · 3 hours ago

  12. Mark Wilson
    Zafar: OR, these businesses will respond to market signals and start providing the service at a more competitive price.

    Which is what happened in Australia with the advent of a single payer universal insurer.  Australia, btw, spends 9% of GDP on universal health insurance providing an excellent level of care and generally not bankrupting anybody.  The US spends 18% of GDP on healthcare.

    Mark Wilson: The other day my physical therapist told me, “Obamacare is gonna kill us.”  He said they had already received letters from the insurance companies stating they plan to reduce their payments for services by 30-40%.  So either the patient is going to pick up the difference, or his small business is going out of business.

    There’s your cost savings. · 3 hours ago

    1 hour ago

    I can’t say I’m super familiar with Australia’s healthcare system, but are you arguing that the path to economic efficiency (low prices and quality service) is a single-payer system?

  13. Goldgeller
    Paul Dougherty: Everyone will be hurt. We just won’t realize it. Life, regardless of political system, has a level hurt associated. The Affrodable Care Act will blennd into the sea of all other hurts. When questioned about its effect the response will be “You think it is bad now, think of the disaster without it!”. Tidy, effective and unassailable. · 5 hours ago

    This is the biggest danger. And you’re so right. But don’t forget, the other thing will be this– “well you Republicans didn’t fund it enough.”

    Isn’t that what they say about conservatives and public schools? “You’re against teachers. You won’t spend enough on them.” 

  14. Zafar

    Mark

    I realise that this is contrary to market theory – which I largely subscribe to.  But when it comes to health care costs, the facts do not conform to the theory.  

    Australia has a single payer basic system (with a mixed private and public delivery of services) – and the country pays 9% of its GDP for healthcare.  Everybody is covered, the quality is as good as the US.  The US lacks a single payer and pays 18% of GDP on healthcare, everybody is not covered.  

    Both are culturally diverse countries with high migrant populations.  The difference seems to be single payer vs no single payer.

    When the facts don’t support a theory, I think the theory should be modified rather than the facts denied.  Fair?

    Regards

    Mark Wilson

    I can’t say I’m super familiar with Australia’s healthcare system, but are you arguing that the path to economic efficiency (low prices and quality service) is a single-payer system? · 28 minutes ago

  15. Mark Wilson
    Zafar:

    When the facts don’t support a theory, I think the theory should be modified rather than the facts denied.  Fair?

    Yes, of course.  The hard part is getting the facts right.  Making sure you’re comparing apples to apples, and controlling for differences.  For example, one reason a country might spend more on something is because they buy more of it, which might be because they want more or need more.  Americans spend more on cars than any other country because we simply choose to buy more of them.  That’s not necessarily a problem in search of a single-payer government solution.

    So if Americans have bad eating and exercise habits, or if our ethnic makeup is one that results in genetically higher levels of obesity and heart disease, it shouldn’t be a surprise we spend more on health care.  What needs to be shown is whether the extra money we spend on healthcare is unreasonable.

  16. Mendel

    Mark and Zafar, I think you might both be right.

    The main point to remember is that we don’t have a free healthcare market in the U.S.  Half of expenditures come from the state, much of the rest from employers.  Nobody sees any real costs, public healthcare invisibly makes private healthcare more expensive (thanks Dr. Bhattacharya for explaining that previously), the states regulate insurers to death, etc.  In many ways, we have the worst of both worlds.

    I think it is perfectly plausible to say that the Australian single-payer plan provides equal or better overall care at less expense than U.S. healthcare, but that a truly free market in healthcare in the U.S. could be even more efficient.

  17. Mothership_Greg

    If we are to have a public option, by all means let us have the politicians offer this and get it passed.  This business of having the CMS bureaucracy micromanage the enormous private payer bureaucracy, and pretend that this will “reduce overhead” and “increase efficiency through economies of scale” or whatever buzzwords they are dazzling the masses with, is utter bollocks.  Government option with well-defined limits, paid for via taxes, with a robust private insurance market that isn’t micromanaged into subservience by the government, to give people that can afford it better coverage?  By all means, let us have that, if the people want it.

  18. Zafar

    Mark

    [Making sure you're comparing apples to apples, and controlling for differences.  For example, one reason a country might spend more on something is because they buy more of it, which might be because they want more or need more.]

    Or can afford more.  But we are comparing two very rich countries (the US and Australia), with similar populations.  Not a rich country with an old population and a poor country with a young one.  I think it is apples to apples.

    [So if Americans have bad eating and exercise habits, or if our ethnic makeup is one that results in genetically higher levels of obesity and heart disease]

    I wish with all my heart that Australians all looked like Crocodile Dundee/Female equivalent, but the truth is that we are in direct competition with the US for MONIW (most obese nation in the world).  We’re fatties too.

    [What needs to be shown is whether the extra money we spend on healthcare is unreasonable.]

    I don’t think it’s unreasonable to buy what you do, but you’re paying too much for it.  Looks like market failure.

    Rgds

  19. Zafar
    Mendel: 

    I think it is perfectly plausible to say that the Australian single-payer plan provides equal or better overall care at less expense than U.S. healthcare, but that a truly free market in healthcare in the U.S. could be even more efficient. · 23 minutes ago

    Could be?  And also could not be, right?  So far it’s hypothetical.

    But looking at systems in comparable countries around the world:

    Are there any free markets in health care that provide a similar or better level of health coverage to Australia’s for a lower proportion of GDP?  (<9%.  I can’t think of any.  Switzerland has an Obamacare like system which costs them 10.8% of GDP according to that Pearl of Truth wikipedia fwiw.)

    Are there any single payer systems in the world which provide a similar or better level of health coverage to the US’  for a lower proportion of GDP?   (<18%.  Yes: Australia, Canada, Israel…)

    I guess I don’t understand the need to to re-invent the wheel wrt health care in the US.  There are so many other existing systems – compare, contrast, pick one – they all work better.

    What am I missing?

  20. Mark Wilson

    Zafar, how do you determine “a similar or better level of health coverage to the US’ “?  For example, there is the often-cited stat that Pittsburgh has more MRI machines than all of Canada.  It’s also frequently noted that average (average!) emergency room wait times in parts of Quebec are upwards of 20 hours, and this is not unusual throughout Canada.  And there are also the figures on the many months wait times for elective surgeries.  Correct me if I’m wrong on these. 

    If you compare cancer survival rates, the US tops the charts.