Has ObamaCare provided more healthcare?

Or, has it just covered more people with health insurance?

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In my consulting / problem-solving class, I emphasize asking the right question before starting to gather data, doing analyses, drawing conclusions and making recommendations.

Makes sense, doesn’t it?

Then, would someone please explain to me why the politcos (on both sides) obsess over health insurance coverage (how many people are covered) and largely ignore the quantity & quality healthcare that Americans are getting?

 

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Source: AAMC

My conclusion: More Americans now have health insurance, but healthcare hasn’t increased … it has just been re-distributed.

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For today, let’s just look at some simple economics – supply & demand.

Start with the demand side:

Roughly 20 million Americans — those with pre-existing conditions, the “near-poor” added to Medicaid rolls, adult children free-riding on parents’ policies — didn’t have health insurance before ObamaCare … they do now.

That’s indisputable.

How much additional healthcare demand is attributable to the newly insured?

Hard to say, and I haven’t spotted any credible studies.

Some (maybe many or most) of the previously uninsured were getting some healthcare before ObamaCare … with hospitals and doctors writing off any unpaid bills.

Some of the previously uninsured had pent-up healthcare needs … conditions that needed to be treated but weren’t being treated because folks didn’t have insurance or the financial wherewithal to self-pay for healthcare services.

Suffice it to say that ObamaCare created additional healthcare demand …  a statistically significant amount of it.

That’s good enough for me.

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What about the supply side?

It’s broadly reported that there is an increasing shortage of doctors in the U.S. — see the summary chart above to visualize the situation.

New doctors are being minted (and imported from other countries) … but an increasing number of doctors are quitting, retiring or scaling back hours … especially primary care doctors.

Note that the shortage existed before ObamaCare was implemented (the red circle) and is projected to widen over time.

For our purposes, the critical point is that there was evidence of a doctors’ shortage before ObamaCare was launched.

That is, demand for healthcare exceeded the supply of healthcare.supply.

In other words, the “system” was operating at full-capacity.

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So,the inescapable conclusion is that healthcare delivered is constrained not by demand — too few people showing up to get treated — but by too few doctors to treat people.

So, increasing demand (i.e. insuring more people) doesn’t increase the aggregate amount of healthcare, it just redistributes the constrained supply of healthcare across a wider population.

It is what economists call a zero sum game.

Those people who previously didn’t have healthcare get some … and, that “some” comes out the hide of folks who had insurance pre-ObamaCare … in the form of fewer visits to the doctor (no appointment slots available) or shorter visits (as doctors speed up to serve more patients).

That’s not a policy statement … it’s simple supply & demand economics.

The policy conclusion: lawmakers should focus more on eliminating faux-demand (e.g. tort reform to decrease the amount of defensive medicine) and, most important,  increasing the supply of healthcare … since supply is what’s constraining the system.

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P.S. If the above chart isn’t sufficiently fancy & detailed for you, here’s the source slide from which the simplified version was derived.

Each of the lines has different forecasting model assumptions.

The solid lines represent demand for healthcare … the dashed lines are projected supply.

The conclusion stays the same … an widening gap between supply and demand.

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Source

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#HomaFiles

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