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Assessing the True Impact of the ACA: Revisiting the CBO's Initial Predictions
Published online by Cambridge University Press: 06 January 2021
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In Obamacare’s Impact on Labor Markets: Limits on the Predictive Value of Romneycare, Josh Archambault makes a number of arguments about the ultimate impact of the Affordable Care Act (ACA). A central point is that the overall impact on the US labor market and economy will be worse than the Congressional Budget Office (CBO) projected—to some extent, because the CBO used the experience in Massachusetts as one piece of evidence in guiding its estimates. A recent report by the CBO on potential effects of the ACA on employment has added additional fuel to the debate. In particular, Archambault argues that more people will leave employer-sponsored insurance (ESI), and that the ACA will cost more than the CBO projected.
Archambault makes many good points. The ACA does add new taxes, such as an additional 1% Medicare tax on families earning over $250,000, a 2.3% tax on medical devices, and additional taxes on some health insurers and tanning salons. Altogether, these taxes were expected to raise roughly $400 billion between 2010 and 2019.
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References
1 Archambault, Josh, What Does Massachusetts’ RomneyCare Tell Us to Expect for Labor Market Impacts Under ObamaCare?, 40 AM. J.L. & MED. 214 (2014)Google Scholar.
2 Id. passim.
3 See CONG. BUDGET OFFICE, THE BUDGET AND ECONOMIC OUTLOOK: 2014 TO 2024 (2014), available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/45010-Outlook2014_Feb.pdf.
4 Archambault, supra note 1, at 217, 225-27 (estimating that the law could cost two to three times more than the CBO projected).
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7 CONG. BUDGET OFFICE, supra note 3 app. B, at 108 tbl.B-2.
8 Archambault, supra note 1, at 3-10.
9 Katherine Grace Carmen & Christine Eivner, Survey Estimates Net Gain of 9.3 Million American Adults with Health Insurance, RAND BLOG (Apr. 8, 2014), http://www.rand.org/blog/2014/04/survey-estimates-net-gain-of-9-3-million-american-adults.html.
10 CONG. BUDGET OFFICE, supra note 3 app. C, at 117.
11 Id. at 118.
12 EXEC. OFFICE OF THE PRESIDENT, TRENDS IN HEALTH CARE COST GROWTH AND THE ROLE OF THE AFFORDABLE CARE ACT 1 (2013), available at http://www.whitehouse.gov/sites/default/files/docs/healthcostreport_final_noembargo_v2.pdf.
13 OFFICE OF THE ACTUARY, CTRS. FOR MEDICARE & MEDICAID SERVS., PROJECTIONS OF NATIONAL HEALTH EXPENDITURES: METHODOLOGY AND MODEL SPECIFICATION 2 (2013), available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology2012.pdf.
14 CONG. BUDGET OFFICE, AN ANALYSIS OF HEALTH INSURANCE PREMIUMS UNDER THE PATIENT PROTECTION AND AFFORDABLE CARE ACT 4 (2009), available at http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/107xx/doc10781/11-30-premiums.pdf.
15 OFFICE OF THE ACTUARY, CTRS. FOR MEDICARE & MEDICAID SERVS., NATIONAL HEALTH EXPENDITURE PROJECTIONS 2008-2018 1 (2008), available at https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/proj2008.pdf.
16 GARY CLAXTON ET AL., KAISER FAMILY FOUND. & HEALTH RES. & EDUC. TRUST, EMPLOYER HEALTH BENEFITS: 2013 ANNUAL SURVEY 31 exhibit 1.11 (2013), available at http://kff.org/privateinsurance/report/2013-employer-health-benefits/.
17 Id.
18 EXEC. OFFICE OF THE PRESIDENT, supra note 12, at 22.
19 DOUGLAS W. ELMENDORF, CONG. BUDGET OFFICE, COMMENT ON “IS THIS TIME DIFFERENT? THE SLOWDOWN IN HEALTHCARE SPENDING”: PRESENTATION TO THE BROOKINGS PANEL ON ECONOMIC ACTIVITY 4, 10 (2013), available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/44595-Presentation.pdf.
20 42 U.S.C. §§ 18071(c), 18083(c) (2012).
21 See, e.g., EXEC. OFFICE OF THE PRESIDENT, supra note 12.
22 CONG. BUDGET OFFICE, supra note 14, at 26-27.
23 See 42 U.S.C. § 18031(g)(1) (outlining changes in provider pay based on patient health outcomes, implementation of programs to reduce medical errors, and implementation of wellness programs, among other changes).
24 Cutler, David M. & Sahni, Nikhil R., If Slow Rate of Health Care Spending Growth Persists, Projections May Be Off by $770 Billion, 32 HEALTH AFF. 841, 841 (2013)CrossRefGoogle ScholarPubMed.
25 See Nat’l Fed’n of Indep. Bus. (NFIB) v. Sebelius, 132 S. Ct. 2566 (2012).
26 See CONG. RESEARCH SERVS., MEDICARE PROVISIONS IN THE PATIENT PROTECTION AND AFFORDABLE CARE ACT 4-5 (2010), available at http://www.ncsl.org/documents/health/mcprov.pdf.
27 Id. at 3, 7-8.
28 OFFICE OF THE ACTUARY, supra note 15, tbl.6.
29 OFFICE OF THE ACTUARY, CTRS. FOR MEDICARE & MEDICAID SERVS., NATIONAL HEALTH EXPENDITURE PROJECTIONS 2012-2022 tbl.6 (2012), available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/proj2012.pdf.
30 See id. tbl.1 (including the effects of the Affordable Care Act in its calculation of national health expenditures and selected economic indicators).
31 See, e.g., Robinson, James, Hospitals Respond to Medicare Payment Shortfalls by Both Shifting Costs and Cutting Them, Based on Market Concentration, 30 HEALTH AFF. 1265 (2011)CrossRefGoogle ScholarPubMed.
32 MEDICARE PAYMENT ADVISORY COMM’N (MEDPAC), REPORT TO THE CONGRESS: MEDICARE PAYMENT POLICY 45-68 (2009), available at http://www.medpac.gov/documents/Mar09_EntireReport.pdf.
33 White, Chapin, Contrary to Cost-Shift Theory, Lower Medicare Hospital Payment Rates for Inpatient Care Lead to Lower Private Payment Rates, 32 HEALTH AFF. 935 (2013)CrossRefGoogle ScholarPubMed.
34 Id. at 935.
35 Clemens, Jeffrey & Gottlieb, Joshua D., Bargaining in the Shadow of a Giant: Medicare's Influence on Private Payment Systems (Nat’l Bureau of Econ. Research, Working Paper No. 19503, 2013)CrossRefGoogle Scholar, available at http://www.uvic.ca/socialsciences/economics/assets/docs/seminars/Gottlieb.pdf.
36 See CONG. BUDGET OFFICE, supra note 14.
37 See Our Processes, CONG. BUDGET OFFICE, http://www.cbo.gov/about/our-processes (last visited May 2, 2014) (describing the CBO's methodology).
38 Katherine Baicker et al., The Oregon Experiment—Effects of Medicaid on Clinical Outcomes, 368 NEW ENG. J. MED. 1713, 1713 (2013).
39 ROBERT H. BROOK ET AL., RAND CORP., THE EFFECT OF COINSURANCE ON THE HEALTH OF ADULTS: RESULTS FROM THE RAND HEALTH INSURANCE EXPERIMENT 23 (1984), available at http://www.rand.org/content/dam/rand/pubs/reports/2006/R3055.pdf.
40 Compare CONG. BUDGET OFFICE, INSURANCE COVERAGE PROVISIONS OF THE AFFORDABLE CARE ACT, CBO's FEBRUARY 2014 BASELINE tbl.3 (2014), available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2014-02-ACAtables.pdf (projecting $1.244 trillion dollars in total exchange subsidy expenditures for 2015-2024), with CONG. BUDGET OFFICE, UPDATED ESTIMATES OF THE EFFECTS OF THE INSURANCE COVERAGE PROVISIONS OF THE AFFORDABLE CARE ACT, APRIL 2014 1, 16 (2014), available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/45231-ACA_Estimates.pdf (reporting the $1.03 trillion figure for exchange subsidies and noting the 14% difference from previous estimates).