Obamacare: Goals vs. Outcomes

Brian Blase,

Release Date
January 18, 2017



The Affordable Care Act aimed to expand health insurance coverage, address pre-existing conditions, & reduce health care costs — but did it? 
Bob Ewing and Brian Blase of the Mercatus Center discuss the goals of the Affordable Care Act (also known as Obamacare) and the implications of possible repeal or replacement by the incoming administration.

    1. The Truth Behind the Affordable Care Act – Learn Liberty (video): Professor Antony Davies explains some of the fundamental flaws of the Affordable Care Act https://www.youtube.com/watch?v=zglnPPxSM8g
    2. Healthcare Premiums: The Death Spiral of Rising Prices- Learn Liberty (video): Brian Blase explains exactly why healthcare premiums are rising. https://www.youtube.com/watch?v=cKjNmw_Nbdk
    3. Is the Affordable Care Act Unconstitutional? (video): Professor Elizabeth Price Foley argues that the Affordable Care Act is unconstitutional as it mandates that American citizens buy a service. https://www.youtube.com/watch?v=2-WISvX-SKI


Bob Ewing: You’re a healthcare expert and I’m not, but I do follow the news and I’ve noticed that there’s a lot of conversation about the Affordable Care Act and broadly speaking about healthcare. We just had a presidential election, you may know. President Trump-elect is going to be taking office in a few weeks, and during the debates and throughout the campaign he talked about repealing and replacing the Affordable Care Act, also known as Obamacare. He has said that he’s appointing as the health secretary a guy named Tom Price, a medical doctor who’s been particularly critical about the Affordable Care Act. What does all of this mean?
Brian Blase: More than a month ago not many people thought we’d be at this place. I think what it means is that there’s major changes coming for the Affordable Care Act. Just yesterday, senate majority leader Mitch McConnell said that repealing Obamacare is priority number one for Congress next year. They have to after repeal it, think very hard about what they’re going to replace it with. It’s going to be a big issue, and I think it means our conversation today is really important.
Bob Ewing: A lot of times people talk about different things on Capitol Hill, but do you think this is actually going to happen?
Brian Blase: It is one of the main campaign promises that was made by President-elect Trump, and Republicans in particular have been talking about repealing and replacing the law ever since it passed in March 2010. So I think if they honor their campaign pledge, yeah, we’re going to see large parts of Obamacare repealed and replaced.
Bob Ewing: You said March 2010 is when the law went into effect. What was going on in the country that made it so important? Why was there such a demand for the Affordable Care Act back then?
Brian Blase: There were three main goals that the law tried to address. The first was to expand coverage. There was about 50 million people without health insurance at the time the law passed, and it was expected that about 30 million would gain insurance coverage because of the law. The second was to address people that had pre-existing conditions. Those are health conditions that are expensive, which made it difficult for many people to purchase health insurance. The third was to address costs. The President talked a lot about decreasing family premiums by about $2500 because they were eating up family budgets.
Bob Ewing: Okay. Three main reasons the law was passed; to expand coverage, so people that didn’t have insurance could get health insurance, to help sick people, people with pre-existing conditions that may have trouble getting coverage, and to make health insurance more affordable, which is why it’s called the Affordable Care Act.
Brian Blase: Correct, those were the goals.
Bob Ewing: Okay. What happened with expanded coverage?
Brian Blase: We think that right now about 20 million people are insured because of Obamacare. Less than was expected, and most people have gained coverage through the Medicaid expansion. Originally all states were supposed to expand Medicaid, but a 2012 decision by the Supreme Court made it optional for states. Thus far about 31 states have expanded Medicaid and about two thirds of the total coverage gain is because of Medicaid expansion.
There were also the other third is largely because in the individual market there were these new things called exchanges and there were subsidies made in exchanges, which enabled people to purchase coverage with the subsidies to buy in the individual market. The individual market, one more term … The individual market, most people get insurance through the workplace. The individual market is available for people that don’t get insurance through the workplace.
Bob Ewing: Okay. How about the folks with pre-existing conditions?
Brian Blase: The law attempted to address pre-existing conditions by requiring all health insurance companies to accept any applicant regardless of their health status, and to charge people premiums that didn’t reflect whether they were healthy or sick. So if you and I are the same age, the insurer had to charge the same premium for you if you were perfectly healthy and for me if I have an expensive medical condition. We can talk in a bit about how that has worked.
Bob Ewing: Okay. The Affordable Care, how has that worked out with decreasing costs for folks?
Brian Blase: You have to understand what costs are. Most people … The health care costs are premiums that they have to pay, forgone wages when you get insurance through work, that’s a cost that your employer is basically taking out of your income, and the taxes that have to be raised to finance government spending through Medicare, Medicaid, and now the provisions of the Affordable Care Act. So costs in total have gone up because total healthcare spending has gone up because of the law. There’s different ways that those costs are distributed, but overall we’re spending more on healthcare because of Obamacare than we would be without Obamacare.