The unaffordable economics of the 'Affordable Care Act'

The “Affordable” Care Act, President Obama’s perversely named disruption of health care, continues to be something America does not want, according to pollsters at the respected Kaiser Family Foundation. They revealed Tuesday that just under half of Americans disapprove of the law, while only 35% approve of it – numbers mostly unchanged over the past year, during which Obamacare’s benefits have been rolled out.

The more Americans see of the law, the more they become confirmed in their dislike of it.

No wonder. Last year’s rollout was botched, but recently the newly installed head of the federal “exchanges,” the artificial markets where customers must go to find government-mandated insurance plans, told a newspaper, “Part of me thinks that this year is going to make last year look like the good old days.”

And many people will be having to visit those exchanges: As the National Journal reported last month, people who found an Obamacare plan they liked and could afford will have to change plans yet again to keep the same deal. Those who simply stick with what they found last year may find themselves owing the IRS because, say consultants, of miscalculated subsidies.

But even if Washington eventually fixes these technical problems, Obamacare is still slamming the American economy.

For one thing, the law is making health care costlier. The Obama administration itself admitted this last week. Actuaries at the Department of Health and Human Services said that health care spending will rise from about one-sixth of Americans’ output last year to one-fifth in 10 years. Taxpayers will bear 48% of that burden, up from 41%, the agency said.

These rising costs, HHS projected, will come from an aging population but also from “spending growth associated with the coverage expansions in the Affordable Care Act.”

Obamacare hits the economy in a still deeper way. University of Chicago economist Casey B. Mulligan explains how in the Wall Street Journal:

“Although the ACA helps specific populations by giving them a bigger slice of the economic pie, the law diminishes the pie itself. It reduces the amount that Americans work, and it makes their work less productive. This slows growth in both personal income and gross domestic product.”

For one thing, Mulligan writes, the law imposes harsh penalties on small and midsize businesses that do not provide health coverage and that hire more employees. “The result of penalizing businesses for hiring and expanding is going to be less hiring and expanding,” he writes.

Another 25 million people cannot get Obamacare’s premium subsidies because their employers do offer coverage. The only way to get those subsidies, he writes, is to go part-time, find an employer who won’t cover them, or stop working:

“Most people wouldn't give up working merely to qualify for a few thousand dollars in assistance. But it is a mistake to assume that nobody is affected by subsidies, because there are people who aren't particularly happy with working, planning to leave their job anyway, or otherwise on the fence between working and not working. A new subsidy is enough to push them over the edge or to get them to stop working sooner than they would have otherwise.”

Employers will adapt, too, says Mulligan. They can avoid penalties by cutting employees’ hours to 29 a week. This isn’t just theory. Investor’s Business Daily reports that last week’s employment figures show industries with many low-wage workers are cutting hours.

“This is not the most productive way to arrange the workplace,” writes Mulligan, “but it allows employers to avoid the mandate and its penalties and helps the employees qualify for individual assistance.”

Mulligan’s point isn’t that Obamacare has no benefits. It is that the law provides them to some people at too high a cost to everyone. It weakens the economy, he writes: “In effect, people who aren't receiving assistance through the ACA are paying twice for the law: once as the total economic pie gets smaller and again as they receive a smaller piece.”

Americans can understand that. The program’s continued unpopularity demonstrates this.