Will Obamacare Boost the Economy?

courtesy CBS Money Watch, March 7, 2014

When it comes to Obamacare, it seems everyone has an opinion, with more Americans harboring negative views about the health law than those supporting it.   

One chief concern is how the Affordable Care Act will impact the economy. Anecdotal reports of employers slashing staff hours to avoid costs associated with the program fueled fears of job losses. In February, a Congressional Budget Office report forecast a decline in full-time equivalent workers as a result of the law.

But now an economic research firm is predicting a economic silver lining to the Obamacare cloud. The law, Capital Economics notes, boosted real consumption growth in January and will likely drive a 0.3 percent increase in GDP growth this year. How so? Since more Americans are gaining health-care coverage, spending on medical goods and services is rising, the report notes.

"There's no disputing that it's going to boost real consumption this year," said Paul Dales, senior U.S. economist with Capital Economics, in a research note. "The private insurance policies that previously uninsured people have been enrolling in since the marketplaces opened in October came into effect in January. Those individuals will already have started to consume medical goods and services."

On top of that, Obamacare also broadened eligibility for Medicaid and the Children's Health Insurance Program. That means those additional consumers are now tapping more health-care services and goods.

Overall, the law could result in $50 billion more in medical spending this year, which would push consumption growth by 0.5 percentage points and overall GDP growth by 0.3 percentage points, Dale said.  

Of course, an increase in medical spending is likely to alarm some, given that the U.S. spends $8,233 per year per person on health care, more than two times what most developed countries spend. Yet one of the ACA's goals is to reach previously uninsured Americans, which means that the boost in medical spending doesn't necessarily equate to higher per-person costs.

There's some evidence to suggest Obamacare is actually driving down the cost of healthcare, Quartz notes. Health-care prices declined in January, reflecting cuts to Medicare, which provides medical coverage for the elderly.

Still, about 48 percent of Americans believe that Obamacare is one of the reasons for rising health-care costs, according to the Kaiser Family Foundation. More finger-pointing is aimed at hospitals, with almost three-quarters of Americans saying the problem is the result of overcharging by medical centers, the study found.

Aside from assuaging fears about Obamacare, the report may also add to concerns about an economic slump. The Labor Department today said the country added 175,000 jobs last month, despite the wintry weather that impacted much of the U.S. This winter has been the third harshest since 1960 in terms of growth and hiring, Bank of America Merrill Lynch analysts estimated.

Even though the winter weather hurt real spending on items such as clothing and gasoline fell in January, higher spending on utilities and Obamacare-sparked medical goods and services helped offset the decline, Capital Economics noted.

Premiums Will Rise in 2015, 

says Sebelius

courtesy The Hill, March 12

Premiums will rise in 2015 under ObamaCare, Health and Human Services Secretary Kathleen Sebelius said on Wednesday.

"I think premiums are likely to go up, but go up at a smaller pace than what we've seen since 2010," Sebelius said in response to a question from Rep. Erik Paulsen (R-Minn.).

Average healthcare premiums for most consumers have been rising steadily for more than a decade, though the trend has slowed in recent years. Experts say it's too early to tell whether changes to the insurance market under ObamaCare are helping to bring down costs.

The open enrollment period for ObamaCare in 2014 doesn't close until March 31, so insurers are still gathering data on new enrollees, and won't be able to calculate 2015 premium rates for several more months.

But the system needs as many healthy enrollees as possible to maintain a balanced risk pool that keeps premiums from jumping in 2015. See more here


 

Obamacare's Secret Mandate Exemption

Wall Street Journal, March 12

ObamaCare's implementers continue to roam the battlefield and shoot their own wounded, and the latest casualty is the core of the Affordable Care Act-the individual mandate. To wit, last week the Administration quietly excused millions of people from the requirement to purchase health insurance or else pay a tax penalty.

This latest political reconstruction has received zero media notice, and the Health and Human Services Department didn't think the details were worth discussing in a conference call, press materials or fact sheet. Instead, the mandate suspension was buried in an unrelated rule that was meant to preserve some health plans that don't comply with ObamaCare benefit and redistribution mandates. Our sources only noticed the change this week.

That seven-page technical bulletin includes a paragraph and footnote that casually mention that a rule in a separate December 2013 bulletin would be extended for two more years, until 2016. Lo and behold, it turn s out this second rule, which was supposed to last for only a year, allows Americans whose coverage was cancelled to opt out of the mandate altogether.

In 2013, HHS decided that ObamaCare's wave of policy terminations qualified as a "hardship" that entitled people to a special type of coverage designed for people under age 30 or a mandate exemption. HHS originally defined and reserved hardship exemptions for the truly down and out such as battered women, the evicted and bankrupts.