Is Obamacare Bad For US Economic Growth?

Tyler Durden's picture

Following the rather stunning shenanigans of Q1 GDP with regard healthcare spending (as we detailed here), we thought, four years after its passage in 2010, it worth analyzing Obamacare's economic impact? Beforehand, economists generally believed that the broader coverage would raise the demand for healthcare goods and services, although there was some disagreement about related effects on healthcare inflation. In reality, as UBS notes, there was too much optimism about a positive immediate economic impact and a negative price inflation effect.

 

Via UBS' Maury Harris,

Statisticians at the Bureau of Economic Analysis (BEA) initially were far too optimistic about what expanded healthcare coverage would immediately mean for U.S. economic activity. When calculating their first estimate of Q1(14) real GDP growth at the end of April, the BEA assumed a 9.1% annualized rate of increase in healthcare services consumption—one-ninth of overall real GDP. However, with more complete information, the BEA now reports a 1.4% decline in such spending. That was enough to trim 1.2 percentage points from earlier estimated annual real GDP growth. According to the BEA,

"The revision to health care services reflected the incorporation of newly available Census Bureau quarterly services survey (QSS) data for the first quarter. The QSS data reflect the revenues for-profit and nonprofit hospitals, physician offices, nursing homes, and other health care providers and the expenses of nonprofit hospitals and other nonprofit health care providers. Prior to receiving the Census QSS data, BEA used information on Medicaid benefits and on ACA insurance exchange enrollments to prepare the previously published estimates of health services."

Does American public see any effects from ACA?

Considering government statisticians' struggles in trying to measure what the ACA is doing to the economy, it is useful to ask if the American public thinks it is making much difference in their lives. A Gallup poll conducted on May 21-25 asked the following question: "As you may know, a few of the provisions of the healthcare law have already gone into effect. So far, has the new law helped you and your family, not had an effect, or has it hurt you and your family?" 14% felt it was helpful, a larger 24% responded that it was not helpful, and 59% cited no effect.

A subsequent Bloomberg National Poll on June 6-9 asked a somewhat similar question: "Since the healthcare law went into effect on January 1st of this year, have you experienced a big change, a little change, or no real change in your health care?" A big change was reported by 24% of respondents, little change was reported by 15% of the respondents, and no real change was cited by 60% of the respondents.

While the ACA implementation has not yet made much difference for most Americans, has it influenced their sense of longer-term security—one key to longer-term saving trends? From a behavioral perspective, more secure households should save less and less secure households should save more. The May 21-25 Gallup poll asked this question: "In the long run, how do you think the healthcare law will affect your family's healthcare situation? Will it make things better, not make much difference, or will it make things worse?" 36% responded "worse" versus 22% responding "better".

So far at least, the ACA does not appear to be a longer-term net confidence booster.

Earlier sharp slowdown in healthcare inflation was unsustainable

In addition to consumption and confidence impacts, the ACA potentially influences healthcare costs. The slowdown until recently in the y/y change in the core personal consumption expenditures (PCE) chain price index inflation was partly attributable to slower healthcare inflation. Economists debated whether the ACA should receive any of the credit, with doubters citing earlier instances where healthcare inflation slowed only to subsequently pick up.

Over the three months through May, healthcare goods and services prices accounted for around 43% of the 40 basis point re-acceleration of core PCE price inflation.

With the y/y change in the hourly employment cost index (ECI) for hospital workers up 1.7% in Q1(14), it is hard to see labor-intensive healthcare services prices rising by much less for any sustained period.

*  *  *

In summary - Yes, Obamacare is bad for the US economy

But apart from massive over-optimism, and negative impacts on confidence and consumption; we are sure the voting public will get behind the man who instigated all of this...

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Flakmeister's picture

Given that growth in the conventional sense is over, is this not then a rhetorical question?

knukles's picture

All that money spent by PhlemObamaCare on everything BUT medical costs..
ABSOLUTE PROOF THAT THE SO CALLED KEYNESIAN MULTIPLIER IS A NEGATIVE FUCKING NUMBER

Shocker's picture

Take a min and look at all the Layoffs in the Hospital / Health Sector.

That should help answer the question

Layoff list: http://www.dailyjobcuts.com

-

Cthonic's picture

A number of states refused to expand medicaid, which in turn hampers their hospitals' access to federal gov't 'disproportionate share hospital program' funds in those states.  Those funds are used to offset some of the costs of treating indigent patients.

https://en.wikipedia.org/wiki/Disproportionate_share_hospital

monkeyshine's picture

All those stories about $6000-$8000 deductible plans... did economists really think that raising the direct costs healthcare consumers pay was going to increase demand for healthcare?

MachoMan's picture

I'm not sure what would increase demand anyway, since virtually everyone that wanted or needed it could already get it...

MontgomeryScott's picture

WELL...

Having to pay double for shitty healthcare and having to be entered into a database that cross-refrences such things as 'gun ownership' (as well as your personal DNA) tends to make the populace more suceptable to stress-related issues, so YES, in that sense, the demand for 'healthcare' will increase.

 

Is Obamacare Bad For US Economic Growth?

Is the Pope Catholic?

Does a bear shit in the woods?

SERVICES produce virtually NOTHING, and only CONSUME money and time. Governments, insurance companies, and banks are much the same in this sense (as if there is any difference between these entities).

The engine that drives so-called 'economic growth' is PRODUCTION of GOODS. The MIC knows this all too well (hence the never-ending war on the emotion called 'terrrr'err'). The government contracts and spending on the militarization of the police in the CONUS through 'block grants' by the DHS are CERTAINLY 'growing' the 'economy' (at least in the minds of the 'government' that forces the average people who produce goods to yield a large and increasing part of their salaries under threat of prison in order to pay for the imprisonment of the entire nation. THIS INCLUDES the OBAMACARE mandates, which are enforced by... wait for it... THE I.R.S.).

SIGN UP, OR BE TAXED. EITHER WAY, YOU WILL PAY. Now, THAT'S 'bullish', isn't it?

Richard Chesler's picture

Anything Obongo touches turns to shit.

 

SDShack's picture

The so called Medicaid Expansion is nothing but a ruse. It provides incentives UP FRONT for states to particpate, but those incentives disappear as the years go by, to the extent that the states are worse off in the long run. More Medicaid enrollees, with lower and lower Federal Payback. That's the reason why so many states refused to particpate. They understood the economics are bad long term for the state. Those that did particpate, were usually already in financial difficulty and needed the extra juice from the Feds to pad their own state deficits NOW, and don't care about what happens in the future. It's HC Cash for Clunkers. 0zer0care is just one big clusterfuck that is going to absolutely destroy the economy beginning 4Q2014, and will be apparent to everyone in the first half of 2015. The train is out of control, picking up speed to about 80mph, and about to reach a 40mph turn. Nothing can stop what is going to happen. Prepare accordingly.

BeanusCountus's picture

Really believe everyone is missing the point. Medicare, Medicaid, health insurance of any kind, it doesnt matter. Healthcare spending is a drain on GDP. It reduces discretionary spending. Period.

remain calm's picture

Maybe so, but the Oboma phone was very stimulating for the economy.

knukles's picture

Yes.
To be carried down the front of tightie whities, set on vibrate, programmed to call itself constantly.

DaddyO's picture

We know Obummercare is destructive and all the other things that have been foisted upon us will continue to unravel.

This is kinda off topic but worth a look.

http://observer.com/2014/06/breaking-meet-emmet-sullivan-irs-judge-who-o...

This judge is a Clinton appointee, but seems to understand equal justice under the law.

DaddyO

Skateboarder's picture

'Justice' and 'law' are some mighty big words. Fuck if either of 'em ever existed in the centralized sense we hold them to be 'true' today.

DaddyO's picture

Unfortunately, when corruption is the norm, legal sensibilities get trashed. As the .gov has grown and become more entrenched in every aspect of daily life, we become more jaded.

DaddyO

Skateboarder's picture

It's not the ever-increasing gubbamin influence that turns you jaded, but rather the apathy from all of your fellow planeteers.

In my opinion, it is the complete and utter lack of understanding of the heirarchy of 'law' that leads to enslavement.

Natural Law (god's law) reigns supreme. It carries, with appropriate weights, all components of man's psyche: compassion, perseverance, duty, mercy, vengeance... even 'justice,' in its most sacred form of settling scores. It is the only law a man ever needs, and it is the only law that comes built-in, as the result of millennia of evolution and knowledge passed.

Constitutional Law is at best an attempt at the preservation of Natural Law with some conditions.

'Legal' or modern law based on penal codes... well...

DaddyO's picture

No argument with Natural Law, it is written on man's heart. Unfortunately TPTB now this and corrupt the teaching from a very early age. It has taken 230 years to get us here and the downhill run is increasing in speed exponentially. Look out below...

You're right on about planeteers, most argue for their limitations and they own them once the arguement is done.

The last several years have led me to really ramp up my self reliance and ability to weather some form of socio-economic turbulence. Although, I think woar is going to be the trigger for economic collapse and with it implementation of a militarized NWO and .gov. Sure hope I'm wrong.

A return to an understanding of Natural Law as a guiding influence will be but a pipe dream until it becomes a necessity.

DaddyO

RichardParker's picture

"Unfortunately, when corruption is the norm, legal sensibilities get trashed. As the .gov has grown and become more entrenched in every aspect of daily life, we become more jaded."

I posted this before.  However it is relevant.

Here are some highlights from:
http://tinyurl.com/ku9vxug

Cost of obamacare; lied
http://www.c-span.org/video/?c3756/clip-presidential-health-care-address
http://www.washingtonpost.com/business/economy/health-care-law-will-add-...
http://www.huffingtonpost.com/2013/05/03/state-officials-health-care-aid...

Promised to put obamacare negotiations on c-span; lied
http://www.cbsnews.com/news/obama-reneges-on-health-care-transparency/
http://dailycaller.com/2011/09/26/c-span-president-never-requested-c-spa...

If you like your health care plan, you’ll be able to keep your health care plan; lied
http://abcnews.go.com/blogs/politics/2009/06/what-does-the-presidents-pr...
http://www.weeklystandard.com/blogs/hhs-admits-you-might-not-be-able-kee...
http://www.forbes.com/sites/aroy/2012/05/01/fortune-100-survey-employers...
http://money.msn.com/now/post.aspx?post=fce28676-f98c-462e-a19d-2f2d8c7e...
http://news.investors.com/ibd-editorials/022813-646270-affordable-care-a...

If you like your doctor, you will be able to keep your doctor; lied
http://www.nationaljournal.com/white-house/lying-about-lies-why-credibil...
http://www.weeklystandard.com/blogs/hhs-admits-you-might-not-be-able-kee...

Refused to fire or prosecute 15 IRS agents who illegally seized the medical records of 60 million people
http://dailycaller.com/2013/06/12/house-committee-looks-into-irs-seizure...
http://www.courthousenews.com/2013/03/14/55707.htm

Hired 16,500 new IRS agents to run Obamacare
http://news.investors.com/ibd-editorials/060313-658637-congress-must-imp...
Too bad he didn't use the money to hire more healthcare workers at the VA. LOL

Illegally bypassed Congress to delay Obamacare’s employer mandate
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/02/white-house-d...

Paid $67 million to so-called “volunteers”
http://www.forbes.com/sites/brucejapsen/2013/08/15/to-help-navigate-obam...

Members of Congress and their staff are exempt from the income limits for Obamacare subsidies that apply to everyone else
http://www.forbes.com/sites/mikepatton/2013/11/14/obamacare-the-real-sto...

How many millions of people lost their employee sponsored health insurance?
How many millions of people had their hours cut because of obamacare?
How many millions of people are being were forced to buy shitty policies that cost way more out of pocket than their employee sponsored plan and cover far less?

Here are some more tidbits
Obamacare requires some people to pay 19% of their income for premiums
http://www.nytimes.com/2013/12/21/business/new-health-law-frustrates-man...
http://www.forbes.com/sites/theapothecary/2013/12/20/utter-chaos-white-h...

Under certain circumstances, Obamacare recipients between the ages of 55 and 64 can have their homes seized by the government after they die
http://finance.yahoo.com/news/obamacare-shotgun-wedding-marry-lose-09150...

All of this is taken from:
 http://tinyurl.com/ku9vxug

ugmug's picture

I'm stuck in an Obamacare socialized medical clinic.

With the digital medical records doctors do not see any actual patients.

My doctor before Obamacare ran off to another state that had lower malpractice insurance costs.

I have yet to actually see my new doctor. I've seen nurse practitioners, residents, so called trained medical puppets, but I have yet to actually see my primary doctor.

I now seldom go to my "doctor" and wait until my pharmacy tells me I have to see a "doctor" to renew my prescriptions.

Skateboarder's picture

Family friends' kid (my age) just finished up medical skool and got his first job. 45K. On call 24/7. Property of the State.

What the fuck...?

RichardP's picture

In the U.S., one may obtain either a Doctor of Medicine (M.D.) or a Doctor of Osteopathic Medicine (D.O) degree upon graduating from an accredited medical school.  But one with such a degree may practice medicine only after they complete a residency program.  The length of these programs range from 3 - 8 years, depending upon the specialty.

So - if your friend's kid just graduated med school and is on-call 24/7, I'm guessing he is in the first year of his residency program.  Residency programs act as gatekeepers by being rough on their participants - so as to weed out all but the most hardy.

Your friends' son is not property of the State.  But his medical license is.  I agree that, before the State grants him a license to practice medicine,  he should be required to prove to the State that he knows his stuff.

MachoMan's picture

What are you talking about?  What exactly is it that you believe changed with your clinic after obamacare?  All of the metallic "obamacare" plans pretty much pick up the torch where it left off... 

If you go to a clinic where you don't see a doctor and other people do all the work, then go to a different clinic...  you go to a shitty provider.  The insurance payments are still flowing to medical professionals and they're happy to see patients.  You're crying wolf too soon.  (it's coming, but not here yet).

RichardP's picture

What exactly is it that you believe changed with your clinic after obamacare?

Metallic plans generally pay less than non-metallic plans.  So providers are inclined to not participate in the metallic plans.  But if they choose to not participate, and they see a metallic patient, the metallic plans send payments to the patient, not the doctor.  And the patients generally don't pass that payment on to the doctor; they keep it.

So - a "punt" if you will is for the doctor to participate in the metallic plans and hire physician's assistants and/or nurse practitioners and pay them a salary to see the metallic patients.  The doctor can still bill in his name, and get paid in his name, and pay part of what he gets as salary to his helper(s).  He gets to keep the rest for himself (which may be a negative number if the total metallic payment does not cover the cost of his NP or PA).

MachoMan's picture

The credentialing/contract between the insurance company and the provider is the same or very similar, regardless whether metallic.  What you're describing is the same process for all providers who choose to be out of network (a process that is increasing due to cuts across the board and was happening prior to obamacare).  If you're going to a provider that has non doctors providing these services, then you're going to a mcdonalds of the medical industry, e.g. a factory/hospital/huge gp center.  Again, my suggestion is to find a different provider.

RichardP's picture

Again, my suggestion is to find a different provider.

I have no problem with that suggestion.

What you're describing is the same process for all providers who choose to be out of network.

What I am describing is a doctor, mine, who is in network for non-metallic plans and out of network for metallic plans.  Blue Cross sends the payment to him for non-metallic patients.  Blue Cross sends payment for metallic patients to the patients, not him - because he chose to not participate in the metallic plans.  This is for California.  Insurance rules are set at the state level, so your mileage may vary.

drstrangelove73's picture

You are wrong ,my friend.My clinic takes Medicare and Medicaid but we don't take Obamacare.The reimbursement is below Medicaid and the claims experience has been horrible.They don't pay.The program is screwed up.Medicaid pays below costs and Obamacare is worse.You are getting your information from the wrong sources.I've been in business in the same location for 30 years-believe me,I know how this works.

MachoMan's picture

What the fuck are you talking about?  There is no obamacare insurance policy...  The insurance policies are provided by the same players that there always were, e.g. blue cross, aetna, cigna, etc.  When you say you don't take obamacare, that means you don't take private insurance?  So you're trying to tell us that universally, private health insurance doesn't reimburse you as much for the same services?  Nonsense...

The reason why medical practitioners don't like private insurance is that it won't pay for bullshit ancillary services (the ancillary services that large providers, e.g. hospitals, need to make a spread on, e.g. paying for minimum wage orderlies to jerk off) or some of the unnecessary procedures that medical practitioners like to blame on fear of lawsuit.  Further, there are issues with collection given deductibles with many private insurance policies, but this has nothing to do with reimbursement rates.

RichardP's picture

When you say you don't take obamacare, that means you don't take private insurance?

No.

A given health insurance company has a myriad of health insurance products.  Each is priced differently from the other, and each pays a different amount for the same health service or procedure.

Lets say you have Blue Cross and I have Blue Cross.  That will mean nothing to the doctor.  He will want to know what Blue Cross plan you have, and what Blue Cross plan I have - because they are all different, and they all pay him a different amount for the same service or procedure.

The Affordable Care Act (ACA - Obamacare) encourages states to establish health-care exchanges.  Health Insurance carriers are not required to offer products through the exchange.  But if they do, the products offered through the exchange must meet certain requirements related to one of these four categories: Bronze, Silver, Gold, and Platinum (hence, the term metallic or metal plans).  These metal plans are what are being referred to when someone talks about doctors not taking Obamacare.  As I've noted upthread, a doctor may choose to participate in non-exchange health insurance plans (non-metallic plans) and to not participate in exchange plans (metallic plans).  The Affordable Care Act (ACA) allows for the purchaser of health insurance to get a government tax credit for part of the purchase price of their health insurance.  But this tax credit is only available on plans purchased through the exchanges - the metallic plans.  No tax credit is available on any health insurance plans purchased outside of the exchanges.

Read through the first few paragraphs of the summary on Page 2 of this link:

http://fas.org/sgp/crs/misc/R42663.pdf

Freewheelin Franklin's picture

I haven't made much money in the past few years. I was stuck in a state socialized clinic to treat a serious but curable disease. There were no "doctors". A nurse parctitioner was treating my disease. This is what the future of healthcare will be in this country. 

 

My state took the Medicaid expansion, nd I qualified. Medicaid pays for EVERYTHING, and depending on your carrier, as long as you stay in network, they spare no expense. It's actually quite disgusting. I even get some OTC medications free of charge. 

 

So, I went to a real GI specialist practice, and they are going to take care of everything. There is no possible way that this system could ever exist on a large scale. 

 

Personally, I consider it relcaiming  stolen property for all the taxes that I have paid and the 3 years of my life that they took from me for commiting a victimless, non-violent crime.

 

Fuck the state. I will take everything they are handing out, and I will enjoy watching their system crash and burn.

MachoMan's picture

I try to explain this to people and they don't listen...  socialized healthcare often provides better serivce than top shelf private insurance.  The weirdest part is that patients who have medicaid will complain to no end that they're being provided substandard services because they're medicaid patients...  no, actually you're getting about 35 unnecessary ancillary services because the medical provider can bill the government for them and the auditors are likely to do nothing, e.g. paying someone to drive you to the gas station to buy a drink.

Omegaman2211's picture

No dipshit, they don't bill the government. They bill ALL OF US FUCKING TAXPAYERS.

MachoMan's picture

that wooshing noise is the point of my post going past your head...

StychoKiller's picture

Nevertheless, two-tier (or more!) medicine is coming:  Obamacare for the Plebes, and Concierge Practices for those that can afford it.

MachoMan's picture

Already here and been going strong for quite a while.  However, the bifurcated system only lasts so long as present pricing structures are in place.  Eventually, the medical factories' fixed costs kill them and we get some semblance of price discovery.  The folks who didn't sell out to the large players and who have no debt are going to be able to weather a helluva storm and will get to pick up some healthy scraps during the transition. 

Omegaman2211's picture

The existence of government is bad for economic growth.

doctor10's picture

"ObamaCare is simpley the other side of the coin of the bank bailouts that started in 2008.The coincidence of the QE taper with the implementation of Obamacare-which the Chief Justice of the Supreme Court assures us all is a "tax"-is too obvious to ignore.

The QE "taper" is simply being replaced by higher insurance premiums paid directly by Americans to insurance companies.  Somebodies in DC decided this was more durable, more permanent, and an easier sell as "health insurance".

At the end of the day, whatver you call the payments, Americans en masss are being held hostage to the quadrillion of unstable debt derivatives-a financial terrorism far more dealy than creation of "Al Queda"

Escrava Isaura's picture

In summary - Yes, Obamacare is bad for the US economy

Wrong!

Obamacare is bad for consumers.

More_sellers_than_buyers's picture

It's great for the economy if you want a centralized soviet state with complete and total contol over all.  Really?  Does someone even have to ask this question? I thought I clicked on USATODAY instead of Zero

phoolish's picture

What a phrigg'in laugh.  Of course ANY extra 'income' went straight to increased costs.  Duh.

 

news printer's picture

Only in America:

Costly prisoner release screw-up worse than first thought: 873 inmates erroneously received reduced sentences

Nebraska’s prison screw-up is much bigger than originally estimated: 873 inmates erroneously received reduced sentences over the past 20 years, state officials revealed Friday.

http://www.omaha.com/news/crime/costly-prisoner-release-screw-up-worse-than-first-thought-inmates/article_85eee8b0-fe09-11e3-a295-0017a43b2370.html

StychoKiller's picture

How many of those 873 are doing crime sprees?  If the answer is zero, then "What difference does it make?"

stinkhammer's picture

choomwagon care for everyone

kchrisc's picture

"Is Obamacare Bad For US Economic Growth?"

Obamacare is additional theft by government for the benefit of the insurance companies and the criminals of government.

So the answer is a resounding yes.

But then I did see a bear shitting in the woods this morning and that might have made me biased.

knukles's picture

The pope quit wearing little red shoes, too.
Seriously

BraveSirRobin's picture

I still want to know how the economy contracts at a 3% annualized rate with no ill-effects on employment or government revenue. Something does not add up. Seriously - no snark, WTF?

MachoMan's picture

Because everyone works for the government...  there is no employment proper and government revenue is a mobius strip.