ACA Predictions Borne Out

July 1, 2014

Pundits and analysts made a number of predictions about the Affordable Care Act when it was enacted. Charles Blahous, senior research fellow at the Mercatus Center, describes five of his own.

Prediction: States will make a variety of decisions when it comes to expanding Medicaid.

  • ACA advocates said that all 50 states would opt in to the expansion because the deal was too good to refuse.
  • In reality, 27 states are expanding their Medicaid programs, 21 are not, and three are currently debating expansion.

Prediction: Expanding Medicaid will cost states money.

  • ACA advocates, including the White House, claimed that expanding the health program would save money, actually improving state budgets.
  • In reality, states have already reported that their costs are higher than expected. California is expecting an additional $1.2 billion in unexpected costs, while Rhode Island is looking at $52 million more in spending, as Medicaid sign-ups have more than doubled expectations.

Prediction: Obamacare will make the deficit worse.

  • The White House said that the ACA would reduce the deficit.
  • In fact, in its 2012 long-term budget outlook which showed the ACA reducing the deficit, the Congressional Budget Office explained, "Projections in this report are consistent with a statutory requirement that CBO, in its baseline projections, assume that benefit payments will continue to be made after trust funds have been exhausted, even if there is no legal authority to make such payments."

Prediction: Expanding insurance coverage will increase consumption and costs.

  • President Obama claimed that the law would save money and reduce emergency room use.
  • In fact, a recent Harvard University study has found that insurance enrollment increases emergency room use.

Prediction: Projected ACA cost savings are unlikely to materialize.

  • Obamacare advocates were confident in the ACA's cost savings projections, citing $750 billion in revenues and savings, including $69 billion in penalties from employers and individuals and $145 billion in Medicare Advantage cuts.
  • In fact, the employer and individual mandates have not been enforced, and Medicare Advantage cuts have been scaled back.

Blahous writes that these predictions were nothing more than "common-sense analysis of easily-predicable effects."

Source: Charles Blahous, "I Was Right About the ACA," Economics21, June 30, 2014. 

 

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