Eleven Assumptions About the PPACA

Megan McArdle lists eleven “talking points repeated as if they’re facts” and attempts to explain the factors behind them. Are they correct or incorrect? No one knows for sure but they are not facts. They are either predictions or opinions with more or less basis. Here they are:

  1. Once Obamacare goes into effect, it will be impossible to substantially cut it back.
  2. Accountable Care Organizations are certain to bring down overall health spending.
  3. Obamacare works because it gets money from deadbeats who go to the emergency room and then stiff the rest of us for the cost.
  4. Emergency room use will decline.
  5. People can game the system by going without insurance and then buying it when they get sick.
  6. Breaking the link between health insurance and employment will spur entrepreneurship.
  7. Obamacare will reduce the budget deficit.
  8. The Independent Payment Advisory Board is going to radically change the relationship between you and your doctor.
  9. People with pre-existing conditions will be able to buy insurance in the private market for the first time.
  10. Obamacare will bend the cost curve.
  11. Obamacare will make bankruptcy a thing of the past, at least for the people who gain coverage.

Some of these are likely, some are possible, some are unlikely. I don’t think that any of them is impossible.

This might be a good time for me to remind people of my views on the PPACA: I think it’s inadequate and will mostly serve to kick the can down the road. However, my objectives are very different from those of most people—I think that we need to constrain the increase in healthcare spending to the increases in costs in the non-healthcare part of the economy.

I’m occasionally taken to task for not rejoicing in this or that new development in the healthcare system. That’s easy to explain. I don’t care that premiums in the exchanges won’t be as high as some of the PPACA’s opponents were predicting. I never predicted one way or another and that’s just a test of predictions rather than a test of the program. I don’t care that healthcare spending is only increasing four times as fast as increases in the non-healthcare parts of the economy rather than six times as fast as it was just a few years ago—it’s still increasing far too fast, unaffordably high. And nobody really knows why that is.

I do agree with this observation of Megan’s:

The consensus about Obamacare among health economists is narrower than the range of opinion among the broader community of public intellectuals, and much narrower than that in the general public. Mostly the experts think that it will be good for the individuals it covers, but that the other beneficial effects promised — such as bending the cost curve — aren’t particularly likely. Increasing the demand for a service does not usually drive the price of that service down, especially when supply is constrained, as the supply of doctors is in the U.S.

I don’t really see how we can constrain the supply of healthcare as we do in the United States, increase the demand of healthcare as has been the case even without the PPACA which, if it functions perfectly, will further increase the demand for healthcare, and still reduce costs as I think the sine qua non of healthcare reform must be.

7 comments… add one
  • steve Link

    The ACA was primarily intended to increase access. It should, as Megan notes, do that. It is already having effects on Medicare spending, but I dont know if those will be sustained.


  • Sadly, it just expands access to insurance and nobody knows yet how much it will do that.

  • Andy Link

    I guess it depends on what one means by “increase access.” There will likely be a nontrivial number of people who will pay more for health insurance with fewer benefits than is currently the case. To me that is decreased access. We’ll have to see how things actually shake-out.

  • steve Link

    @Andy- Fewer benefits is highly unlikely. Paying more is probable for a small group.


  • jan Link

    Social programs are difficult to diffuse once people feel they are entitled to them. That will be the case with Obamacare, no matter how bad it is ultimately viewed. ER use may initially recede. But, if glitches remain in the ACA, and/or there are long waiting times for appointments and treatment, people will default to old behavior, go to the ER so they can have their medical needs met on the spot. Many people, especially younger ones will see no need for health insurance until or unless there is a real expensive medical emergency. I guess that could be considered ‘gaming’ the system. People are doing that already with disability payments. That’s just the survival mentality of people in play. Most entitlement programs leave their projected costs in the rearview mirror once passed, and cost much more than CBO’s calculations. Just look at medicare! Finally, I think Obamacare will raise the budget deficit, and when fully implemented see the cost curve go much higher rather than be bent.

  • Andy Link


    For a lot of people “paying more” is fewer benefits. We’ll see how small that group actually is.

  • jan Link

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