Should Obamacare Be Repealed?

One of the biggest controversial topics in America is healthcare, specifically Obamacare. Without Obamacare, millions of people would be without healthcare. For this reason, and many other economic factors, I believe Obamacare should not be repealed.

Economic Arguments Against My Position

a. The Affordable Care Act negatively impacts the supply of labor.

i. Obamacare reduces employment among less skilled workers as it negatively affects the reward to work for other workers. As an individual makes more money, they lose subsidies which discourage workers from working more or getting a better paying job. (2)

ii. The Congressional Budget Office stated that “The expansion of Medicaid and the availability of subsidies through the exchanges will effectively increase beneficiaries’ financial resources. Those additional resources will encourage some people to work fewer hours or to withdraw from the labor market.” (2)

iii. Compared to previous laws, individuals now have higher marginal tax rates from the ability to garnish health care subsidies at lower incomes. Low-wage workers are affected the most because they are most responsive to higher tax rates or lower subsidies. As less and less people will look for work, the production of goods and services will decline along with household consumption causing our economy to suffer. (2)

b. Obamacare develops a marriage penalty.

i. Individuals lose subsidies if they choose to marry without any change to earnings. For a couple that has two individual earners between 100 and 400% of the Federal Poverty Level, choosing to get married causes an increase in effective marginal tax rates between 10 and 24%.

ii. Your income must be between the poverty level and four times that amount for your household size in order to qualify for one of Obamacare’s tax credits. The marriage penalty mainly results from the fact that the combined salaries of couples can push them out of the range of eligibility faster than if they were single and had separate paychecks. (4)

iii. This is a problem because the federal poverty level of a two-person household is less than double that of a one-person household. Say a couple is making a combined $40,000, but one brings in $29,000 while the other brings in $11,000. If they weren’t married, they would pay much less for coverage as the higher earner would pay close to $1,000 less for a silver plan and $625 less for a bronze plan. The partner making $11,000 would even qualify for Medicaid depending on that state they live in.

c. Obamacare has increased insurance premiums and the cost of health care.

i. In 2008, the average employer-sponsored family plan cost $12,680 while employees paid $3,354 of the bill. By 2016, the average employer family plan cost $18,142 while employees paid $5,277 of the bill. (5)

ii. High-deductible plans have become standard and by 2016, 51% of all covered workers face deductibles of at least $1,000. As co-pays have risen, patients are paying more out of pocket for prescriptions than they did in the past. (5)

iii. New medical treatments and drugs are very expensive, but as more sick people have insurance, they get more expensive treatments that previously, they could not afford. Expensive procedures drive up premiums for all insurance customers taking more money out of the economy that could have been used to purchase goods and services. (7)

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Economic Arguments Supporting My Position:

a. Obamacare slows the growth of healthcare costs which raises employments and workers’ salary.

i. From 2010-2012, real per-capital health spending grew at an average annual rate of just 1.1%, which was the slowest ever. It is less than the long-term historical average of 4.6% that stretches back to 1960. (6)

ii. The ACA is contributing to these rates through reforms to Medicare that reduce excessive payments to medical providers and private insurers. It also did so by developing innovative new payment models that incentivize more efficient and higher-quality care. (6)

iii. Slower growth in healthcare costs reduces the growth of the health insurance premium paid by employers. In the short run, this reduces the cost of hiring an additional worker, making it easier for employers to add jobs. One study co-authored by a leading health economist found that reductions in healthcare cost growth due to healthcare reform could increase job growth by 250,000 to 400,000 per year by the second half of this decade. (6)

b. The ACA improves people’s health and makes workers more productive.

i. It expands access to needed medical care by expanding coverage. Greater access to care reduces mortality, improves mental health, and improves the self-reported health status. (6)

ii. The ACA guarantees access to preventive services recommended by the United States Preventive Services Task Force without cost-sharing. These services have been proven to improve health and save lives. Since 2010, more than 71 million Americans have received at least one preventive service without cost-sharing. (6)

iii. The ACA helps improve the quality and efficiency of care by giving hospitals incentive to reduce the number of patients returning to the hospital after discharge. They do so by ensuring high-quality care during the initial hospital stay or making appropriate arrangements where patients will receive care after discharge. (6)

c. Obamacare increases real spending in the economy and keeps it maintainable.

i. The growth in real spending closely matches the 4% increase in the number of Americans with health insurance since the implementation of the Affordable Care Act in 2012. (1)

ii. Overall, people are spending more on insurance and drug prescriptions than they could before being uninsured or being covered through a bad insurance plan. People with preexisting health conditions can no longer be denied for health insurance. (1)

iii. The ACA will reduce severity of furutre recessions by safeguarding families’ access to health care and supporting household budgets in the face of job and income losses. (6)

I believe repealing Obamacare would be bad for the economy and is the wrong thing to do. The Affordable Care Act raises employment and worker’s wages by lowering the growth rate of health care costs in America. Obamacare serves another very important service as it improves the health of American’s in which it increases worker productivity and employee engagement. It also increases real spending in the economy and prevents the severity of future recessions while it accelerated our recovery from the Great Recession. Overall, the positive affects Obamacare has on the economy outweigh the negatives and it should not be repealed.