Latest / Trumponomics / 35: Why Are We Still Fighting About Obamacare?

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35: Why Are We Still Fighting About Obamacare? · Trumponomics

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Speaker 1: This episode of Bloomberg Benchmark is sponsored by HSBC, winner
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Speaker 1: of Trade Finance America's sixteen Company Award for best Supply
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Speaker 1: Chain Finance Bank in North America HSBC where ambition connects
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Speaker 1: with opportunity. I have to applaud you for not calling
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Speaker 1: it sibelious group. It really seemed there like every former
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Speaker 1: official was adding group after their name. Hi, and welcome
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Speaker 1: back to Bloomberg Benchmark, a show about the global economy.
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Speaker 1: It is Thursday April. I'm Tori Stiwell and economics reporter
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Speaker 1: with Bloomberg News in d C. And I am joined
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Speaker 1: by my co host Dan moss Are, Executive Economics editor
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Speaker 1: in New York. Cadien. Hi, Tory, Great to be here. Yeah. Well,
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Speaker 1: I'm not sure if everyone has seen the headline s lately,
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Speaker 1: but the Patient Protection and Affordable Care Act a k
0:57
Speaker 1: Obamacare is back in the news. United Health Group, which
1:01
Speaker 1: is a health insurer, last week announced that it will
1:04
Speaker 1: drop out of the government organized health insurance markets in
1:08
Speaker 1: at least twenty three states because it's losing too much
1:11
Speaker 1: money on those policies. And United Health had about almost
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Speaker 1: eight hundred thousand a c A customers as of March one,
1:17
Speaker 1: so there are a decent number of people who will
1:19
Speaker 1: have to shop for new plans or be left for
1:22
Speaker 1: with fewer options for coverage. And Obamacare has also remained
1:26
Speaker 1: a hot issue during this election cycle. A Kaiser Family
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Speaker 1: Foundation pole last month showed seventy eight of registered voters
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Speaker 1: say health care is very or extremely important to them
1:40
Speaker 1: when it comes to deciding who they'll vote for. And
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Speaker 1: that was second only to you guessed at the economy
1:45
Speaker 1: and jobs. With the law staying squarely in the spotlight
1:50
Speaker 1: some six years after its passage, we thought this was
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Speaker 1: a great opportunity to break down exactly what it is,
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Speaker 1: what it's supposed to do, and how that's been work
2:00
Speaker 1: hang out and because so much of the debate centers
2:02
Speaker 1: on economic issues, the impact on businesses, on employment, on healthcare, inflation,
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Speaker 1: Benchmark is the perfect forum for a discussion that's right.
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Speaker 1: And I can't speak for everyone else, but I do
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Speaker 1: feel like every time I hear a discussion about the
2:17
Speaker 1: Affordable Care Act, it's usually very one sided. Um and
2:20
Speaker 1: so we have a solution for that here on Benchmark.
2:24
Speaker 1: We have two guests here with me in the DC
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Speaker 1: studio to help us make sense of it all. First off,
2:30
Speaker 1: we have the former US Health Secretary, Kathleen Sibelius. She
2:34
Speaker 1: helped President Barack Obama. Shephard the law through Congress back
2:37
Speaker 1: in and she oversaw the writing of tens of thousands
2:40
Speaker 1: of pages of regulations and traveled regularly to persuade Americans
2:44
Speaker 1: to sign up for coverage through the new online market places.
2:47
Speaker 1: After resigning two years ago, she now runs her own
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Speaker 1: consulting firm, Sibelius Resources. I have to applaud you for
2:54
Speaker 1: not calling it Sibelious Group. It really seemed there like
2:58
Speaker 1: every former official was adding group after their name. We
3:02
Speaker 1: also have Jim Capretta, who spent more than two decades
3:05
Speaker 1: studying American healthcare policy, and lately he's specifically been looking
3:10
Speaker 1: at market based alternatives to Affordable Care Act. He's a
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Speaker 1: senior fellow at the Ethics and Public Policy Center and
3:17
Speaker 1: a visiting fellow at the American Enterprise Institute. Now, Jim,
3:21
Speaker 1: I hope you won't mind me placing the American Enterprise
3:24
Speaker 1: Institute on the spectrum of think tanks that are clustered
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Speaker 1: around d C. How would you characterize that think tank? Well,
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Speaker 1: I think it's fair fair to say that mostly it's
3:35
Speaker 1: an independent organization. People can take their own point of view,
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Speaker 1: but most of the people there tend to be on
3:39
Speaker 1: the on the conservative side of the spectrum or to
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Speaker 1: some degree. Good to have you both here, Thank you,
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Speaker 1: Good to be with you. Dan and I are going
3:48
Speaker 1: to start out with a brief overview of a c
3:51
Speaker 1: just to give all of our listeners sort of a
3:53
Speaker 1: foundation to work off of for the rest of the show.
3:57
Speaker 1: So it had the sweeping goals of both giving more
4:00
Speaker 1: people health insurance and reshaping a medical system that spends
4:03
Speaker 1: more and delivers less than any other wealthy country. It
4:07
Speaker 1: was signed into law on March and took full effect
4:11
Speaker 1: in October, and it has a few key features that
4:15
Speaker 1: you've probably heard about at some point or another. First off,
4:19
Speaker 1: the law requires most US citizens and legal residents to
4:22
Speaker 1: have health insurance, so if your employer doesn't offer it,
4:25
Speaker 1: you need to go out and find it on your own,
4:27
Speaker 1: or else you have to pay a fine. So when
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Speaker 1: you hear individual mandate, that's what we're talking about. And
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Speaker 1: the goal behind that was to make sure we had
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Speaker 1: enough healthy customers signing up to balance out the cost
4:37
Speaker 1: of sicker ones. And if you meet certain income limits,
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Speaker 1: the government also provides subsidies to help you pay for
4:42
Speaker 1: that insurance. The law also created state based health insurance exchanges,
4:48
Speaker 1: these websites that are sort of like a Kayak dot com,
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Speaker 1: but for comparing health insurance packages from different providers. States
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Speaker 1: can run their own exchanges, but in many cases they've
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Speaker 1: deferred to the federal government to do so. Thirdly, employers
5:04
Speaker 1: who don't provide health coverage and have the equivalent of
5:07
Speaker 1: fifty or more full time employees will be fined. Those
5:11
Speaker 1: who do offer coverage have to pass an affordability test,
5:14
Speaker 1: and employers with more than two employees have to automatically
5:17
Speaker 1: enroll their employees into plants, with an option for employees
5:20
Speaker 1: to opt out. The law also introduced separate exchanges for
5:24
Speaker 1: small businesses to purchase coverage for their employees. And lastly,
5:27
Speaker 1: the law expanded the number of people eligible for many kite,
5:31
Speaker 1: though not all states have chosen to do so. And
5:34
Speaker 1: I know that we've just thrown a ton of information
5:37
Speaker 1: at everyone, but hopefully our guests here can help us
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Speaker 1: digest it all and come up with some answers about
5:42
Speaker 1: what's been working and what hasn't. So to start, I
5:45
Speaker 1: thought it'd be good for our listeners to get a
5:47
Speaker 1: sense of where each of you stand on the issue,
5:49
Speaker 1: so succinctly if you could, if you had to label
5:52
Speaker 1: the law grantly, I guess a success or a failure,
5:56
Speaker 1: which would it be? And why do you want to
5:59
Speaker 1: start a self CAVI? Well, sure, I think overall it's
6:04
Speaker 1: done pretty well. There are some fragile parts of the
6:07
Speaker 1: law that are still evolving. But um, we have the
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Speaker 1: lowest number of uninsured people that we've ever had in
6:17
Speaker 1: this country, so access to insurance for a part of
6:20
Speaker 1: the population who didn't have affordable insurance is definitely working.
6:23
Speaker 1: About twenty million new lives are enrolled in either Medicaid
6:29
Speaker 1: expanded programs or in the marketplaces. Health costs in spite
6:34
Speaker 1: of all of the I would say noise and conflicting
6:40
Speaker 1: reports out there, overall health inflation for expenditures across the board,
6:45
Speaker 1: government health inflation for the two big programs Medicare and
6:49
Speaker 1: Medicaid and what individuals are spending is rising at the
6:53
Speaker 1: slowest level in fifty years. And that continues to happen,
6:58
Speaker 1: so that while um, no one can say costs have
7:01
Speaker 1: gone down, they have been rising at a much slower pace.
7:06
Speaker 1: And I think for the first time ever. Health providers
7:11
Speaker 1: tell me there is a real um revolution underway in
7:18
Speaker 1: terms of how health care is being delivered by providers
7:22
Speaker 1: because the government has chosen to use its enormous pay
7:27
Speaker 1: lever about a trillion dollars a year to move as
7:31
Speaker 1: quickly as possible from fee for service payments, which meant
7:34
Speaker 1: the more stuff you do, the more dollars you get
7:36
Speaker 1: paid into a more quality based, outcome based payment system,
7:43
Speaker 1: better care, lower costs, more improvements along the way, and
7:48
Speaker 1: that is beginning to show some very promising results. Jim,
7:52
Speaker 1: what do you think, Well, I would say that the
7:56
Speaker 1: law in general has and you'll be surprised, this succeeded
8:00
Speaker 1: in the ways that we're fairly easy to succeed at
8:05
Speaker 1: and but is not doing well and all the things that,
8:07
Speaker 1: of course are harder and more difficult to to do. Um.
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Speaker 1: The law basically expanded medicaid to many millions of more people.
8:17
Speaker 1: That didn't take too much. The eligibility processes are already
8:20
Speaker 1: in place all around the country. Uh, it's difficult politically,
8:23
Speaker 1: as you can see, there's a lot of resistance to it.
8:26
Speaker 1: But essentially what they did is they changed the income
8:29
Speaker 1: levels to a higher level and started signing up a
8:31
Speaker 1: lot more people in advertising and through the outreach system
8:34
Speaker 1: that we're already in place, brought them more into the
8:37
Speaker 1: Medicaid program. So of the people, the Congressional Budget Office
8:40
Speaker 1: says that in the law likely reduced the people who
8:45
Speaker 1: are uninsured or otherwise would have been uninsured by about
8:49
Speaker 1: seventeen million people on a base of probably around fifty
8:53
Speaker 1: million or so. That is not a small matter. So
8:56
Speaker 1: let's all stipulate that they the law has done a
9:00
Speaker 1: that part of it um. But I would say if
9:03
Speaker 1: you look at the exchanges, which are also supposed to
9:05
Speaker 1: be a big part of covering and insured and changing
9:09
Speaker 1: how insurance is delivered and establishing a news insurance system,
9:14
Speaker 1: I think they're it's largely it's limping along, but it's
9:18
Speaker 1: got a lot of problems. First of all, the number
9:21
Speaker 1: of uninsured that have gone into the exchanges is probably
9:24
Speaker 1: quite low. You don't have an exact estimate, but it's
9:27
Speaker 1: probably in the low single digit millions. So most of
9:30
Speaker 1: the people that ended up in the exchanges were either
9:32
Speaker 1: insured and maybe not so great insurance before, or we're
9:36
Speaker 1: in the individual market that essentially got closed down by U.
9:40
Speaker 1: The a c A, and they were forced into this market. Uh.
9:43
Speaker 1: People who can voluntarily decide to move into the exchanges
9:47
Speaker 1: or not, especially if they're paying their own premiums, are
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Speaker 1: deciding and huge numbers not to do it. They don't
9:52
Speaker 1: find the products attractive, the premiums are too high, the
9:55
Speaker 1: deductibles are far too high. Settling for a fine, they
9:59
Speaker 1: end up paying the fine, or they stay uninsured, or
10:01
Speaker 1: they try to find a way into the employer marketplace
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Speaker 1: if they can. If some of this was so easy,
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Speaker 1: relatively easy, as you mentioned at the stop, why wasn't
10:12
Speaker 1: it done sooner? Oh? For the political circumstances weren't right.
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Speaker 1: I mean, I didn't say that it was easy politically.
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Speaker 1: I meant it was easy administratively, in the sense that
10:23
Speaker 1: we did many Medicaid expansions over the last forty years.
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Speaker 1: This was a large one, but another one in a
10:28
Speaker 1: long line of Medicaid expansions that brought more people into
10:31
Speaker 1: the program. Frankly, we did a huge expansion and Medicaid
10:35
Speaker 1: like coverage for children in the nine nineties of almost
10:39
Speaker 1: comparable size, and so this wasn't unprecedented in terms of
10:44
Speaker 1: bringing more people into a publicly subsidized insurance system. It
10:47
Speaker 1: was sort of a well known path to how to
10:49
Speaker 1: do that. The difficult part is trying not to have
10:53
Speaker 1: as many people on publicly subdidized insurance, having a stable
10:56
Speaker 1: insurance market that is outside of publicly running rance it
11:00
Speaker 1: is more like a private system there. I think the
11:03
Speaker 1: law is having a lot of difficulty. Frankly, well, Jim,
11:06
Speaker 1: you mentioned the Congressional Budget Office, and we're going to
11:08
Speaker 1: get back to that in a sak. Let's just take
11:11
Speaker 1: a step back and consider one of the primary goals
11:14
Speaker 1: of the Affordable Care Act, which is to make healthcare
11:18
Speaker 1: insurance accessible to more people. Now, as of the end
11:23
Speaker 1: of the third open enrollment period under the a c A,
11:26
Speaker 1: twelve point seven million had signed up for coverage in
11:29
Speaker 1: those marketplaces, up from eleven point seven million last year
11:34
Speaker 1: and eight million in twenty fourteen. Now, while that's in
11:37
Speaker 1: line with the target the Health Department announced the head
11:41
Speaker 1: of this year's open enrollment, it's short of the twenty
11:44
Speaker 1: one million the CBO projected for back in March of
11:49
Speaker 1: last year, and as I think you mentioned, CBO recently
11:53
Speaker 1: lowered its forecast, and which, as Kathleen mentioned, is the
11:58
Speaker 1: first full year of Obama's coverage expansion, the percentage of
12:02
Speaker 1: people without health insurance was ten point four percent, or
12:05
Speaker 1: thirty three million people, according to the Census Bureau. And
12:08
Speaker 1: that's down from forty one eight million people. So it
12:12
Speaker 1: looks like the law has achieved that goal of providing
12:16
Speaker 1: more people with health insurance. But at what sort of cost?
12:19
Speaker 1: How has this affected households, and how has this affected
12:23
Speaker 1: the US budget? Do you want to start well, I
12:26
Speaker 1: think again, what we're talking about is a slice of
12:31
Speaker 1: the overall insurance market. The President really had a couple
12:35
Speaker 1: of choices and Congress had choices going into this. Do
12:39
Speaker 1: you start all over, wipe the slate clean and do
12:43
Speaker 1: as some people suggested? And one of our Democratic candidates
12:47
Speaker 1: is still suggesting kind of a medicare for all, everybody's
12:50
Speaker 1: in a single payer public plan. That was Sanders, That's
12:55
Speaker 1: Bernie Sanders. But that was a lively debate in Oh
12:59
Speaker 1: No Mine when this whole law was being looked at.
13:02
Speaker 1: Or do you and this is the path that the
13:04
Speaker 1: President and the majority of Congress chose at the time,
13:08
Speaker 1: do you try and fill the gap, so leave in
13:10
Speaker 1: place the employer plans worth here there and ninety of
13:16
Speaker 1: larger employers offer health insurance continue to offer health insurance. UH.
13:21
Speaker 1: Veterans have their own insurance plans, those over sixty five
13:25
Speaker 1: have a separate insurance plans, those low income Americans. So
13:29
Speaker 1: there was a portion of the market, the individual market
13:32
Speaker 1: and some small groups that was really on their own.
13:35
Speaker 1: Everybody was medically underwritten, so your own health issues were
13:39
Speaker 1: taken into account. You could be totally locked out by
13:43
Speaker 1: an insurance company, you could be locked out for the
13:46
Speaker 1: conditions which caused you to be sick in the first place,
13:50
Speaker 1: and you could be priced pretty much anywhere over the boards.
13:54
Speaker 1: That's the portion of the market that the Affordable Care
13:57
Speaker 1: Act addressed. And UM there has always been a lot
14:01
Speaker 1: of churn in the market, people in and out. If
14:03
Speaker 1: they get a job at Ford Motor Company, they dropped
14:06
Speaker 1: their own insurance and joined the Ford plan. If they
14:08
Speaker 1: leave that job because they retire early, they're back on
14:11
Speaker 1: their own. And also some people just signing up for
14:14
Speaker 1: plans and then canceling it. You bet, um, and that's
14:16
Speaker 1: always happened in the individual market. People moved in and
14:19
Speaker 1: out about six months at a time. So some of
14:22
Speaker 1: what we're seeing in the new marketplaces is very familiar,
14:25
Speaker 1: lots of churn, lots of folks coming in and out,
14:28
Speaker 1: incomes change, job circumstances change, um. Not surprisingly, people who
14:34
Speaker 1: were older and sicker, we're desperate for some coverage, particularly
14:39
Speaker 1: comprehensive coverage where their medical conditions would not be blocking
14:43
Speaker 1: them from getting insurance. They were the first ones in
14:46
Speaker 1: the door, they were the first ones in the gate.
14:48
Speaker 1: They are older and sicker than a lot of people
14:53
Speaker 1: who have not chosen yet to come into that market.
14:56
Speaker 1: So I think some of what we're seeing is was predictable.
15:01
Speaker 1: This is a more expensive popular and when you put
15:04
Speaker 1: everybody in the same pool, which is what insurance is
15:06
Speaker 1: supposed to be balancing risk, you get sick and I
15:10
Speaker 1: don't one year, and then I get sick the next
15:13
Speaker 1: year and you don't. That's that's a risk pool. You
15:15
Speaker 1: don't need everybody to get sick at once um or
15:19
Speaker 1: you can't afford it. So some of what we're seeing
15:21
Speaker 1: I think was able to be predicted at the outset
15:25
Speaker 1: and able to be looked at. There is more competition
15:29
Speaker 1: in this market than there has ever been before. Uh,
15:33
Speaker 1: there are more choices that consumers have than they've ever
15:36
Speaker 1: had before. But it's still a brand new kind of
15:39
Speaker 1: fledgling risk pool that needs to be developed, and we
15:43
Speaker 1: need more younger and healthier people to join that market. Yeah,
15:47
Speaker 1: and Jim, before we go to break, what do you
15:49
Speaker 1: think is the scope for that? Do you think younger
15:51
Speaker 1: and healthier people will actually join the market, what its
15:54
Speaker 1: future enrollment prospects look like? Well, I mean, I think
15:58
Speaker 1: I think it's going to be tough. Frankly, I think
16:00
Speaker 1: the the view of the plans that are being offered
16:02
Speaker 1: on the exchanges is starting to harden because look, I mean,
16:06
Speaker 1: anybody who's blow about two hundred or two the federal
16:10
Speaker 1: poverty line and income which for a single person is
16:13
Speaker 1: you know, twenty five thousand dollars a year up to
16:15
Speaker 1: about thirty dollars a year, they're going to get a
16:17
Speaker 1: very large subsidy from the federal government that makes the
16:19
Speaker 1: premium relatively attractive inside the exchanges. For anyone who has
16:24
Speaker 1: to pay the premium themselves slightly higher incomes where it's
16:27
Speaker 1: phased down, the products are looking quite unattractive to them.
16:31
Speaker 1: You can look in pulling data and see it. And actually,
16:33
Speaker 1: if you just go on on and look at some
16:34
Speaker 1: of the offerings you'll see, yeah, actually did it this week.
16:36
Speaker 1: You know, a bronze plan or silver plan with a
16:39
Speaker 1: with a you know, very large deductible for a single
16:42
Speaker 1: person and still a premium of six or seven or
16:45
Speaker 1: eight hundred dollars a month. You know, people are gonna
16:47
Speaker 1: start to say, I can't afford that, right because I'm
16:49
Speaker 1: gonna pay a lot of premium before and a deductible
16:52
Speaker 1: before I see any coverage. So I think the the
16:55
Speaker 1: attractiveness of the policies is really dependent on the amount
16:59
Speaker 1: of federal subsidy a person is getting. And that's the difficulty.
17:02
Speaker 1: It's really bifurcated the market for people with incomes in
17:06
Speaker 1: the eligibility cut, where they big subsidy, they are finding
17:08
Speaker 1: the products relatively attractive. Above that not not so much.
17:12
Speaker 1: The only thing I would say before we go to break,
17:14
Speaker 1: just so people have what Jim said close at hand.
17:19
Speaker 1: I think there is a some misguided view that somehow
17:25
Speaker 1: this subsidy is an unusual thing. And virtually every employer
17:30
Speaker 1: plan offered, the individual employee has a major share of
17:35
Speaker 1: that plan paid by his or her employer. And that's
17:40
Speaker 1: the mindset that really this plan was constructed under. Since
17:44
Speaker 1: these folks are often mom and pop operators working on
17:49
Speaker 1: their own. Entrepreneurs have two or three jobs, they don't
17:53
Speaker 1: have an employer paying a share. So the subsidy really
17:58
Speaker 1: is the sub institute for an employer plan. I'm gonna
18:02
Speaker 1: share most people in any insurance plan could pay a
18:05
Speaker 1: hundred percent out of their own paycheck, out of their
18:09
Speaker 1: own pocket, and I think that some people have looked
18:13
Speaker 1: at the subsidy as something unusual. It actually mirrors what
18:17
Speaker 1: happens each and every day in workplace plans, where the
18:20
Speaker 1: employer picks up a major share of the tab, and
18:23
Speaker 1: then the employee kicks in for him or herself for
18:26
Speaker 1: their dependence and moves on. Well, we're going to take
18:30
Speaker 1: a quick break for a word from our sponsor, but
18:32
Speaker 1: when we come back, we will continue our discussion on
18:35
Speaker 1: what's working and what's not with the Affordable Care Act
18:37
Speaker 1: and what this year's election may mean for the law
18:40
Speaker 1: after this break. This episode of Bloomberg Benchmark is sponsored
18:47
Speaker 1: by HSBC, with over eight thousand global relationship managers on
18:51
Speaker 1: the ground in over sixty countries. HSBC makes your global
18:55
Speaker 1: ambition their local business. HSBC. Let's turn to healthcare costs.
19:03
Speaker 1: Healthcare inflation as measured by the personal consumption expenditures that's
19:08
Speaker 1: a gauge of the Federal Reserve looks at closely, has
19:11
Speaker 1: trailed overall core inflation for three consecutive years now. Economists
19:17
Speaker 1: say at least part of that slowdown may be attributed
19:20
Speaker 1: to Obamacare, which encourages shorter hospital stays and limits on
19:25
Speaker 1: unnecessary procedures. But from what we gather, healthcare costs are
19:30
Speaker 1: broadly expected to start re accelerating. Jim Wiser, Well, first
19:37
Speaker 1: of all, they did re accelerate. So if you look
19:41
Speaker 1: at the national Health Expenditure accounts, the accounts that are
19:45
Speaker 1: looked at and run by the government, they announced the
19:48
Speaker 1: last year that those costs went up nationwide by five
19:52
Speaker 1: point three the highest level and I think seven years Uh.
19:58
Speaker 1: The expectation from those same p people is that the
20:01
Speaker 1: increase will be similar in and sixteen and beyond. I
20:07
Speaker 1: think this notion that the Affordable Care Act is related
20:11
Speaker 1: to the broad slowdown in health spending, this is one
20:15
Speaker 1: area where I think I will disagree with the secretaries
20:18
Speaker 1: that this I don't I don't believe that's the case.
20:23
Speaker 1: If you go back to two thousand and two, healthcare
20:25
Speaker 1: inflation in the United States was about nine point six percent.
20:28
Speaker 1: It fell to four point eight by two thousand and eight.
20:32
Speaker 1: So if there was something associated with the A C
20:34
Speaker 1: A that brought and then trend continued then into two
20:38
Speaker 1: thousand nine, ten and eleven, you'd be hard pressed to
20:40
Speaker 1: say people were in anticipating. You know, back in three
20:43
Speaker 1: and four and five, you know that the A C
20:45
Speaker 1: A was going to be enacted and therefore, you know,
20:47
Speaker 1: resulted in this broad slowdown. Moreover, there's been a global
20:50
Speaker 1: slowdown in health spending across the entire industrialized world of
20:55
Speaker 1: comparable amounts that has occurred in the United States. Now,
20:58
Speaker 1: I know, we think the A C A did a
20:59
Speaker 1: lot of eight things, but it probably didn't slow down
21:02
Speaker 1: health spending global. And yet this period does coincide with
21:06
Speaker 1: you mentioned two thousand a night a rather apocalyptic economic
21:10
Speaker 1: environment followed by a recovery certainly within the G seven
21:15
Speaker 1: that's been okay but not super awesome. Now, could that
21:22
Speaker 1: not be driving this rather than anything to do with
21:24
Speaker 1: the A C A. If you don't mind, I'll just
21:26
Speaker 1: say one more word about this, and I of course
21:29
Speaker 1: that's the case. The government actuaries that look at this
21:33
Speaker 1: for the government, for the executive branch, have reached that
21:36
Speaker 1: exact conclusion. They run a regression analysis several times going
21:40
Speaker 1: back decades, and the slowdown that has occurred in recent
21:43
Speaker 1: years is very predictable based on the economic conditions that
21:47
Speaker 1: occurred in the United States at that time. So look,
21:50
Speaker 1: I'm not trying to dismiss entirely everything that is in
21:53
Speaker 1: the a c A. Some of those provisions are having
21:56
Speaker 1: I think a marginal effect, but by and large, the
22:00
Speaker 1: notable care organization phenomenon, the bundled payments, the readmission policy.
22:04
Speaker 1: If you look at the estimates that were done both
22:06
Speaker 1: at the time they were enacted and since they are
22:09
Speaker 1: minor events in a trillions and trillions of dollar health system,
22:13
Speaker 1: and let me just push a little let me just
22:15
Speaker 1: push you a little bit, there could have not also
22:17
Speaker 1: reflect except can I get in this conversation before you
22:20
Speaker 1: move in a different direction, because I think I think
22:23
Speaker 1: it's important to have a baseline of what we're talking about.
22:27
Speaker 1: I don't think there's any question nor any dispute that
22:31
Speaker 1: the economic downturn had a significant impact on health expenditures. Overall,
22:37
Speaker 1: everyone agrees to that. What I think there is some
22:41
Speaker 1: dispute about and now I have seen gather differing reports
22:47
Speaker 1: than Jim is reading. A lot of economists are beginning
22:51
Speaker 1: to also say, now in twenty sixteen, eight years after
22:56
Speaker 1: the economic downturn, that there's a continued slow down in
23:01
Speaker 1: health costs. The five percent increases above what was seen
23:07
Speaker 1: in prior years, but it's significantly below what the trend
23:10
Speaker 1: line was before the turndown. So we're still in a
23:14
Speaker 1: period of compressed growth. And in spite of the fact
23:20
Speaker 1: that Medicare has more people coming into the program each
23:23
Speaker 1: and every day than they've ever seen larger enrollments, Medicaid
23:27
Speaker 1: as larger enrollments, their overall health inflation costs are at
23:30
Speaker 1: about one point three percent. So we're still seeing a
23:35
Speaker 1: change in costs, not necessarily due to, as Jim said,
23:39
Speaker 1: some of the new ways of paying providers organizing providers,
23:43
Speaker 1: but I think there's a very significant change underway within
23:48
Speaker 1: the health system, understanding that the payment system is going
23:52
Speaker 1: to look very different in the future, and that money
23:54
Speaker 1: is actually coming out of the system for the first time.
23:57
Speaker 1: I want to hit two more points before and out
24:00
Speaker 1: of time. One of those is one that's very near
24:03
Speaker 1: and dear to my heart as an economics reporter, and
24:05
Speaker 1: that is the A c AS effect on employment, and um,
24:10
Speaker 1: you know, economists themselves are still debating what the effect
24:14
Speaker 1: is there. And you know, some have said that it
24:16
Speaker 1: would encourage employers to shift more people into part time
24:20
Speaker 1: work to avoid providing that health insurance and the regulatory
24:23
Speaker 1: headache that would come with trying to figure out how
24:25
Speaker 1: to do that. Um, and others have said, you know,
24:28
Speaker 1: it sort of liberates employees to a certain extent, allows
24:32
Speaker 1: them to strike it on their own, et cetera. Why
24:34
Speaker 1: is the impact on employment so murky and how do
24:38
Speaker 1: you eventually think that will shake out? Well, I think
24:42
Speaker 1: the the gold standard for looking at this is probably
24:45
Speaker 1: the Congressional Budget Office, And there's a lot of forces
24:48
Speaker 1: going in both directions. I'll grant you that in the
24:51
Speaker 1: A c A there's some provisions and economists might say
24:53
Speaker 1: might improve employment, But the biggest effects, according to CBO,
24:57
Speaker 1: go in the opposite direction toward the hampening labor force participation.
25:02
Speaker 1: And what they estimated is that by twenty nineteen or so,
25:08
Speaker 1: two and a half million people at full time equivalent
25:12
Speaker 1: of hours worked will drop out of the labor force
25:15
Speaker 1: due to the incentives of the A, C, A and
25:17
Speaker 1: the mechanism. The reason is that the subsidy structure is
25:20
Speaker 1: provided for people so that they can First of all,
25:23
Speaker 1: a lot of people can now get health insurance without working.
25:26
Speaker 1: So it used to be that if you were not
25:28
Speaker 1: on Medicaid, the most straightforward way to get health insurance
25:31
Speaker 1: was actually to actually go into the labor force, try
25:34
Speaker 1: to get an employer that had insurance and get coverage
25:37
Speaker 1: that way. Now that's not the greatest way to do
25:39
Speaker 1: things in the world, but that's that's the reality. So
25:41
Speaker 1: when you provided a lot of insurance options for people
25:44
Speaker 1: outside of the employement sector, some people do drop out
25:47
Speaker 1: of the labor market. The second big effect is you
25:50
Speaker 1: phase out the subsidies by income, so as you earn
25:53
Speaker 1: more money, you get a smaller subsidy by the federal government.
25:57
Speaker 1: That's according to CBO, it's like a sent essentially like
26:00
Speaker 1: an implicit tax on earned income on top of the
26:03
Speaker 1: payroll tax, on top of the income tax. And it's
26:05
Speaker 1: quite substantial, and so some people in the two D
26:10
Speaker 1: the poverty range will actually work less than the otherwise.
26:12
Speaker 1: With well, let's just keep with the job market for
26:15
Speaker 1: just one second. In Kathleen, you may want to jump
26:17
Speaker 1: in here, you know, Jim, this is an uneven economic recovery,
26:22
Speaker 1: to be sure, but one bright spot is the labor market.
26:25
Speaker 1: It's going gangbusters. Unemployment rate in the United States is
26:30
Speaker 1: approaching five jobless claims are the lowest in a couple
26:33
Speaker 1: of generations. I mean, if this was such a dire
26:36
Speaker 1: thing for the labor market, wouldn't it be showing up? Well.
26:40
Speaker 1: I think, you know, as someone who's looked at this carefully,
26:43
Speaker 1: that the people that have exited the labor force is
26:47
Speaker 1: still in these several millions compared to what it was
26:51
Speaker 1: prior to the downturns. So much of that is due
26:54
Speaker 1: to retirements, right that. Some of it is early retirements,
26:56
Speaker 1: but some of it is people who just decided at
27:00
Speaker 1: that they would rather you know, they find the prospects
27:02
Speaker 1: not very good, and so they're not entering the job markets.
27:05
Speaker 1: I mean, it's it's hard to argue that the labor
27:08
Speaker 1: market is great when the number of people United States,
27:11
Speaker 1: the population has grown, and the number of people in
27:13
Speaker 1: the United States working today is still not fully caught
27:16
Speaker 1: up to the trend line that would have been had
27:18
Speaker 1: we not had the recession. Well, I find this discussion,
27:25
Speaker 1: frankly sort of baffling, given the predictions which were dire
27:31
Speaker 1: when this law was passed. The prediction was that this
27:36
Speaker 1: a c A Obamacare bill would be a job killer.
27:40
Speaker 1: We have had fourteen million new jobs over the last
27:45
Speaker 1: seventy three months, the longest continued growth of jobs in
27:49
Speaker 1: the country. So I think at a macro level, it's
27:52
Speaker 1: very hard to argue that we've had a job killer
27:55
Speaker 1: bill the CBO data. I also take a slightly different lens.
28:00
Speaker 1: It's no question that there may be some people impacted
28:02
Speaker 1: by subsidies. There also are lots of people who no
28:06
Speaker 1: longer have to stay in a job beyond what they
28:11
Speaker 1: would like to do until they get to Medicare eligibility age,
28:16
Speaker 1: because now if you retire early, you have an option
28:20
Speaker 1: for health insurance that you didn't have before. And actually
28:22
Speaker 1: the single largest uninsured population prior to the passage of
28:28
Speaker 1: this bill where people fifty five to sixty five. So
28:32
Speaker 1: there was some job lock based on I have to
28:36
Speaker 1: stay for insurance. My wife has to take an off
28:40
Speaker 1: farm job to get insurance for the family farm. We
28:43
Speaker 1: have to make certain kinds of job choices, which now
28:48
Speaker 1: hopefully people are able to start their own business, to
28:51
Speaker 1: look at a second career, do other things. So there
28:54
Speaker 1: is some way of looking at also this job flexibility,
28:59
Speaker 1: which is not necessarily a bad idea, but maybe very
29:03
Speaker 1: positive idea. And finally, the largest growth sector, one of
29:07
Speaker 1: the largest growth sectors in this new jobs economy is
29:11
Speaker 1: in the health care area. Lots of people coming into
29:14
Speaker 1: the health career for service delivery, for tech involvement I
29:19
Speaker 1: T has exploded, startups have exploded, so it's been in
29:24
Speaker 1: its own economic boost I would say over the last
29:27
Speaker 1: five years. Well, I think we need to wrap up
29:30
Speaker 1: here shortly, but I think this is an important part
29:33
Speaker 1: and I do want to act get to this part
29:35
Speaker 1: of the interview. So I want to turn to the
29:38
Speaker 1: future of the law. Congressional Republicans have led effort after
29:42
Speaker 1: effort to repeal the law, and we know that it
29:45
Speaker 1: does remain fairly a little unpopular with voters have an
29:50
Speaker 1: unfavorable view of the A c A compared with who
29:54
Speaker 1: have a favorable favorable view, and that's fairly well split
29:57
Speaker 1: along party lines. Um Ted it has promised to repeal it.
30:01
Speaker 1: Donald Trump has also promised to repeal it and replace
30:04
Speaker 1: it with quote something so much better. Um And on
30:08
Speaker 1: the other hand, heavily Clinton wants to keep Obamacare but
30:11
Speaker 1: fix its shortcomings. Jim, why the focus do you think
30:15
Speaker 1: from Republican lawmakers on repealing instead of making what we
30:19
Speaker 1: have better? Uh? Well, first of all, I need to
30:24
Speaker 1: say that I don't think the just for the for
30:27
Speaker 1: your listeners, I don't think the stances of the two
30:30
Speaker 1: leading Republican candidates is very uh satisfactory. I think if
30:34
Speaker 1: they're going to talk about healthcare, I think they're going
30:37
Speaker 1: to whoever becomes the nominee will need to provide to
30:41
Speaker 1: the public a much clearer view of what vision they
30:45
Speaker 1: have for healthcare in the United States that would actually
30:48
Speaker 1: work as practical and could pass in the Congress. So
30:52
Speaker 1: there's going to be an obligation, and I think both
30:54
Speaker 1: of the leading candidates for the time being have fallen
30:56
Speaker 1: way short of that. So having said that, I think
30:59
Speaker 1: in con risk the the main view is that, you know,
31:04
Speaker 1: there is a basic philosophical problem here that needs to
31:08
Speaker 1: be addressed and settled and maybe eventually will be perhaps
31:11
Speaker 1: in favor of the law that's already on the books,
31:13
Speaker 1: which is that how much authority over the health system
31:17
Speaker 1: do you want to have residing with the federal government.
31:20
Speaker 1: I mean, I think that's fundamentally the issue. And of course,
31:23
Speaker 1: in the short term, you know, it doesn't make that
31:26
Speaker 1: much difference. It's really over a ten or fifteen or
31:28
Speaker 1: twenty year period where the federal government can exert a
31:31
Speaker 1: lot more authority and power over the health system, as
31:33
Speaker 1: we were just talking about it, with delivery system reformed
31:35
Speaker 1: through Medicare, changing how physicians are are paid, changing the
31:39
Speaker 1: quality metrics for physicians, changing how when rates insurance plans.
31:44
Speaker 1: The federal government has a huge amount of authority now
31:47
Speaker 1: under this law, and I think the basic concern amongst
31:49
Speaker 1: opponents in the Congress, I mean, people who actually understand
31:52
Speaker 1: how it works, is that they think it's too much
31:55
Speaker 1: that over time that's going to erode its quality, you know,
31:57
Speaker 1: force a lot of people into publicly and publicly subsidized
32:01
Speaker 1: products and publicly regulated products, it will be of lower value.
32:05
Speaker 1: Do you think, Kathleen, that it's realistic that this whole
32:07
Speaker 1: thing gets rolled back if we if we do get
32:09
Speaker 1: a Republican president in sixteen, and if not, why do
32:14
Speaker 1: you think Republicans keep focusing on it? Well, there certainly
32:18
Speaker 1: has been a constant drumbeat since the day the President
32:23
Speaker 1: signed this law that it should be repealed and replaced.
32:30
Speaker 1: I think that second term, I would absolutely agree with Jim.
32:34
Speaker 1: Six years after the law was signed, I still have
32:36
Speaker 1: no idea what that means, and I'm not sure that
32:40
Speaker 1: there have been many viable suggestions put forth about what
32:45
Speaker 1: that means, except let's run just a national high risk
32:47
Speaker 1: pool and everybody who's sick can be in a risk
32:50
Speaker 1: pool and go back to the old days where insurers
32:52
Speaker 1: could basically they can choose who they wanted to cover
32:56
Speaker 1: in in this individual market. Again, if you work for
32:59
Speaker 1: four Motor Company and you sign up for their health plan,
33:02
Speaker 1: they don't go through your own personal health history, they
33:05
Speaker 1: don't limit your ability to participate your an employee you're in.
33:10
Speaker 1: So the individual market is really what we're talking about.
33:14
Speaker 1: Should people be able to buy insurance, should they be
33:18
Speaker 1: pulled together? I think there are lots of areas of
33:21
Speaker 1: this law that could have some significant improvement. I hope
33:26
Speaker 1: we get to a discussion in the next Congress where
33:29
Speaker 1: maybe that's an effort. How do we move forward, What
33:33
Speaker 1: kinds of alternatives are there to ensuring more people, bringing
33:38
Speaker 1: down costs, making delivery system reform really work and accelerate
33:42
Speaker 1: the progress has been made. How can we work together
33:44
Speaker 1: to do it as opposed to relitigating the past. So
33:49
Speaker 1: we'll see what happens, but I would agree with you,
33:51
Speaker 1: I'm eager to see what the candidates mean by replace
33:56
Speaker 1: and what proposition they are willing to put forward to
34:00
Speaker 1: the public. Well, thanks so much to both of you
34:02
Speaker 1: for joining us. I know I learned a lot today
34:04
Speaker 1: and I hope our listeners did too. And Benchmark will
34:07
Speaker 1: be back next week. Until then, you can find us
34:09
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34:12
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34:15
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34:25
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