Metsfanmax wrote:BigBallinStalin wrote:"A tax on those who do not purchase health insurance helps society recuperate from the costs these people instill on the rest of society "
But if the government policy (inadvertently) increases the price of health insurance while imposing various taxes to fund this endeavor, then it may be the case that the social cost with ObamaCare would be greater than the social cost without ObamaCare.
If this is true, then the less social costly choice would be... no ObamaCare.
Yes, obviously if the net social cost of the law is negative, we should not support it. However, it is not clear that a net rise of insurance costs is enough to cause this. First, because that doesn't necessarily mean health care costs in total go up on average. Second, because the government revenues subsidize those at the bottom of the market who cannot afford health insurance. So, if health insurance prices go up but more people are able to get health care, we may find a net social benefit to the law, depending on how much we value the ability of the poor to get access to health care. The substantive debate on the ACA is essentially in that last link in the chain: will the law really provide more access to health care for the millions who didn't previously have health insurance?
If you want to throw in subjective values such as " depending on how much we value the ability of the poor to get access to health care," then we can insert any amount of other subjective values which can drive the costs up or down, so let's drop the subjective costs.
ACA cost per year is projected to be
$35 billion for the next 10 years--as of April 2012. This cost only considers government expenditures; rising prices of health insurance are omitted. Nevertheless, this cost is
expected to rise:
The positive case for the ACA's financial integrity hung on two improbable outcomes: that all of its cost-savings provisions would work exactly as hoped, while none of its spending provisions would cost more than envisioned. Yet CBO warned at the time that many of the law's cost-saving provisions "might be difficult to sustain," while the Medicare Chief Actuary also warned that projected savings "may be unrealistic."
One of the first provisions to bite the dust was the CLASS long-term care program, suspended in 2011 due to its financial unsoundness. This wiped out a revenue source counted on to produce $70 billion during the first decade to help finance the ACA's coverage expansion.
The 2012 U.S. Supreme Court decision further complicated the law's financing. the Court rendered Medicaid expansion optional for states, thus giving them an incentive to let the federal government shoulder the entire cost of subsidizing more generous insurance coverage for those above the poverty line. Many states are now taking advantage of this latitude, likely increasing federal costs for the exchanges.
Another of the ACA's important financing sources-supposedly delivering $140 billion in revenues over 10 years-was the requirement that employers offer affordable coverage to workers or pay a penalty. But earlier this year the Obama Administration announced it would not enforce this requirement during its statutory implementation year of 2014.
And on and on and on. The per-year cost will much be greater than $35 billion. Looks like $>50bn per year if those cost-savings are not realized (which they won't be, while some will hardly like be).
So, the ACA would reduce health
care costs because presumably more people would be insured while spending >$50 billion per year to do so.
Then, the ACA would provide health insurance at a lower price to one group while raising prices for all others (and either the prices rise to cover those at a lower price--or the quality would drop in order to compensate for the losses, which would otherwise occur).
So, govt. EXP + the additional rise in prices and/or reduction in insurance quality = the current total cost to society
But what about an increase in supply for health care? Given that the health insurance market is not that competitive, then I wouldn't expect the supply of health insurance providers to dramatically increase, thereby lowering the prices (especially since the prices are basically being controlled by government). Therefore, if the provision of insurance to more people would induce them to use health care services more often, then the demand for health care rises (thus, the price rises). And if the price doesn't rise--because of government regulations, then quality drops (because businesses try not to run themselves bankrupt). For those services of health care provided/funded by government, then the increased price will be eaten by the government, thereby raising their expenditures.
So, it's initial G expenditures on ACA + additional rise in insurance prices and/or reduction in insurance quality + additional rise in health care prices (thus costs for private and govt. sector)* and/or reduction in health care quality
*maybe the supply of health care services would increase, but it depends on the inflexibility of prices due to government regulation, and on the supply of doctors, nurses, technicians, etc. which doesn't react quickly and which enjoy their per-State control over their respective markets (thanks to having an exclusive license per State). Given the tight regulation of the health care market, I would still expect prices to rise with the increased demand yet somewhat increased supply.
I don't see how the ACA would reduce the costs of health care.
For your argument to hold, you'd have to have health care costs reduce enough to offset the government's >$50 bn per year, the annual rise in health insurance prices and/or reduction in quality, and most likely the annual rise in health care prices and/or reduction in quality. (Of course, if quality for these services is decreased, then the money-measured cost would decrease, but obviously a reduction in overall quality is not a good thing).
