Brian Blase, Ph.D., is the President of Paragon Health Institute. Brian was Special Assistant to the President for Economic Policy at the White House’s National Economic Council (NEC) from 2017-2019, where he coordinated the development and execution of numerous health policies and advised the President, NEC director, and senior officials. After leaving the White House, Brian founded Blase Policy Strategies and served as its CEO.
The Falsehoods of Obamacare
Today’s newsletter starts with a new Paragon paper that reviews a dozen of the major promises of the Affordable Care Act (ACA), finding that the law was sold to the American people on false premises. The ACA failed to bend the cost curve, millions of people lost their preferred plans and doctors, and it has significantly added to federal deficits. I coauthored the paper with Casey Mulligan and Phil Kerpen, and Paragon published it jointly with Unleash Prosperity. The newsletter also highlights a new Paragon Pic on declining American life expectancy and two new government reports that underscore the continued work that needs to be done on price transparency and hidden costs of recent changes to Medicare Part D.
A Dozen Broken Promises, Seven Million Canceled Plans, and Hundreds of Billions in Debt
Here is a quick rundown of the issues discussed in my paper with Casey and Phil—both the promise and the result.
| Promise | Result |
| The ACA would help cut the deficit, including its student loan provisions. | The ACA has significantly added to the federal debt, including costly student loan losses. |
| The ACA would “bend the cost curve,” saving $2,500 per family. | Individual market premiums nearly doubled from 2013 to 2017. The primary ACA provision for bending the curve, the “Cadillac tax,” never went into effect. |
| The ACA would save lives. | Life expectancy fell three consecutive years for the first time in nearly 100 years. |
| The ACA would be a program only for U.S. citizens. | By 2024, many unauthorized immigrants would be enrolled in subsidized ACA plans. |
| The ACA would take the stress out of shopping for health insurance. | The ACA portal was one of the most notoriously unreliable websites ever launched. |
| Penalties on employers that fail to provide coverage would provide massive revenue. | Actual collections are less than 5 percent of what was projected. |
| The ACA would increase economic growth. | The ACA resulted in smaller businesses, fewer full-time jobs, and significant disincentives to work. |
| Medicaid would be an efficient way to increase coverage. | The ACA’s Medicaid expansion is far more expensive than projected. |
| If you liked your plan and doctor, you would be able to keep them. | Millions of people had their plans canceled and lost access to their doctors. |
| The individual market would become a competitive, robust marketplace. | Enrollment was less than half of expectations, with higher premiums and deductibles and more restrictive provider networks than expected through 2020. |
| The ACA would decrease emergency department use as newly insured individuals would finally have a normal place of care. | The ACA, particularly Medicaid expansion, caused emergency room use to soar, particularly for non-emergency services. |
| The ACA would end abuses by health insurance companies. | The ACA has been a gift for health insurers with its massive government subsidies. |
Declining Life Expectancy
This week’s Paragon Pic (below) is taken from my paper with Casey and Phil. Life expectancy—perhaps the best measure of our population’s health—did not increase after 2014, which is the year the ACA expanded Medicaid and the new exchanges were implemented. Instead, after increasing an average of 1.5 years per decade before 2014, life expectancy declined from 2014 through 2017. Life expectancy worsened in states that adopted the ACA Medicaid expansion from 2014 to 2017 relative to states that did not adopt the expansion. Despite roughly $2 trillion in ACA-related spending over the past decade, Americans are not healthier—a clear sign that there are far more important determinants of health than enrolling more people in Medicaid and Medicaid-like coverage in the exchanges.
CBO Revisits Part D Redesign
A new analysis from the Congressional Budget Office (CBO) reaffirms the high cost of the Biden administration’s drug policies.
One of the key provisions of the 2022 Inflation Reduction Act (IRA) was a redesign of Medicare’s Part D drug program that capped out-of-pocket expenses at $2,000 per year and shifted significant costs to taxpayers. At the time, CBO expected that this would increase federal spending by about $25 billion over 10 years.
CBO’s new analysis finds that these costs will be much higher than expected – potentially up to $20 billion higher in 2025 alone. This has been driven by a 179% increase in average plan bids for 2025.
In addition to the new taxpayer costs from the IRA, seniors’ Part D premiums would have still significantly increased. In a cynical pre-election move, CMS created an extralegal Part D “demonstration” to transfer billions to insurers so they would not raise premiums months before the election. CBO’s analysis highlights how the cost of bad policies continues to shift onto taxpayers. CBO estimates the demo will cost $5 billion in 2025, and that this new debt will lead to another $2 billion in interest costs. You can read more about the recently announced 2025 premiums for Medicare Part D and Medicare Advantage plans in last week’s Paragon Prognosis post by Jackson Hammond and Joe Albanese.
More Work to Be Done on Price Transparency
Hospital expenses are the biggest driver of higher health care costs as hospital spending was nearly 50 percent of private health plan spending from 2012 to 2022. A new report by the Government Accountability Office (GAO) finds that more action is needed to counter this trend through health care price transparency.
In 2021, the Centers for Medicare and Medicaid Services (CMS) required hospitals to publish their prices in a standardized, machine-readable format. This basic step towards transparency was intended to help keep prices down by increasing competition. However, health plans and researchers have reported challenges with using the often inconsistent, inaccurate, or incomplete data from hospitals.
GAO found that CMS’s enforcement efforts have not been enough to ensure the accuracy of the pricing data. GAO recommends that CMS do more and provides a few cost-effective ways for CMS to improve enforcement. These include CMS reviewing a random sample of hospitals’ pricing data or prioritizing reviews when hospital-negotiated prices differ significantly from the prices that insurers report.
All the best,
Brian Blase
President
Paragon Health Institute
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