The Affordable Care Act we can’t afford

Many Catholics support “universal health care,” presumably wishing that no one be denied lifesaving (or more routine?) treatment because of a lack of money. The centuries-long history of Catholic hospitals is evidence of the Church heeding Christ’s call to care for the sick. When I read about the Good Samaritan picking up an assault victim and treating his wounds, though, I don’t usually think of failed websites, underpaid physicians, long lines, increasing government debt, and unemployment.

Yet, the current U.S. manifestation of “universal health care,” which has nonetheless received support from many prominent Catholics (sure, Sister Carol Keehan, but more orthodox folk as well), is Obamacare or the Affordable Care Act (ACA). Okay, perhaps some who advocate for universal health care mean something other than socialized, government-run medicine, but only someone well-versed in Catholic social thought would presume that the former is a distinct wider category than the latter. For the average person (and average voter) they’re synonymous. Which is why, whenever a criticism is offered of Obamacare, the critic is labeled heartless, in the pocket of Big Pharma, and contrary to eons of Catholic teaching.

So, with the understanding that I’ll be thusly labeled in the comments, let’s address the recent Congressional Budget Office (CBO) publication that made headlines last week for its prediction of an Obamacare-caused reduction in the labor force by 2.5 million people (I almost said workers, but the labor force includes entrepreneurs and business owners too, who deserve equal dignity to what the Church advocates for workers. They will likely be affected as well as employees). Rely if you will on the analysis of others about the effects of the ACA, but why not go to the horse’s mouth?

• Spending on Medicare, Medicaid, CHIP, and “subsidies offered through health insurance exchanges and related spending” is expected to “grow rapidly in coming years because of changes mandated by the Affordable Care Act, reaching 6.1 percent of GDP in 2024 (being 5.1% of GDP in 2015, p.16).” The government will spend more on, and will thus need more tax revenue to fund, these programs.
• The labor force participation rate (the percentage of the working-age population that is both willing and able to work) is expected to decline partly because of the aging population, but also “reduced incentives to work attributable to the ACA–with most of the impact arising from new subsidies for health insurance purchased through exchanges–will have a larger negative effect on participation.” Footnote 15 reads “By providing subsidies that decline with rising income (and increase with falling income) and by making some people financially better off, the ACA will create an incentive for some people to work less (p. 38).“
• “CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive. Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked (p. 117).” So, low-wage workers will work and earn even less.
• “The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA. The decline in full-time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours… The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week) (p.117-8).“

• “In CBO’s view, the ACA’s effects on labor supply will stem mainly from the following provisions, roughly in order of importance: the subsidies for health insurance purchased through exchanges; the expansion of eligibility for Medicaid; the penalties on employers that decline to offer insurance; and the new taxes imposed on labor income (p. 118).”

Silver lining: that’s 2.5 million more golfers.

More quotes could be had. It’s no surprise to economists that socialized medicine, where buyers do not bear the full cost of treatment, results in distorted incentives. Of course, the current system of employer-provided health insurance has bad incentives of its own, mainly due to 1) health benefits being an untaxed form of compensation, which pushes people to buy insurance through their employer rather than like they do car insurance, and 2) the evolution of health insurance from covering only catastrophic or very costly procedures to covering virtually any procedure, no matter how inexpensive. When “insurance pays for it,” buyers overconsume.

But, those faults of the current system are easy enough to fix. They certainly do not warrant an overhaul creating a system of bureaucracy, top-down management, and manufactured shortages.

I’m curious if Catholics who support “universal health care” (lay or religious) are supportive of the ACA’s incentives which reduce people’s willingness to work. Is it charitable to support a program that encourages dependence on a (shrinking) group of workers? If the contraception mandate ever gets modified to our liking, will that pave the way for Catholic support of Obamacare, even if it pushes millions out of work? Is “universal health care” a goal that should be pursued even if it forces the country to go bankrupt? For as much as I get chastised for not respecting the Church’s high opinion of labor and work (because I consider managers, entrepreneurs, and CEOs to be people too), I find it odd that many Catholics support the latest manifestation of socialized medicine that unsurprisingly reduces the incentive to work.