An independent analysis of the Affordable Care Act

My columns have generated quite a bit of discussion online. Although I usually interpret some business dynamics for those of us in Robeson County, I have occasionally written about more general topics such as the elegance of compound interest and how capitalism best harnesses greed.

In a social media comment, I was challenged by a reader to offer my own independent analysis of the Affordable Care Act.

Here goes: Different from most political or economic commentators, I invite you to hold me accountable for these predictions if the law remains the same. All bets are off if changes are made, which I hope they are. These are roughly in order of the overall impact I predict:

— In polls, about half of Americans report that the ACA has had no effect on them directly. They are probably people with employer-provided health insurance. They are overlooking the fact, though, that the Congressional Budget Office estimates the ACA will add $1.4 trillion to the national debt during the next 10 years. That’s approximately $4,500 for every woman, man and child. The average share of the debt for a family of four is $18,000. Of course, these costs will continue every year after the 10-year period.

— Where will all of this money go? In possibly the largest transfer of wealth from government to corporations ever, a small number of health insurance companies will receive as much as $2 trillion in premium over 10 years. A New York Times article notes that the four largest insurance companies have seen their stocks more than double, outpacing the market by 50 percent during the same period.

The newspaper quotes an industry executive saying that, through the ACA, the government is legally mandating that millions of people buy their product, which costs thousands of dollars.

Unite Here, the union of 300,000 employees that was the first to endorse Obama in 2008, estimates that nearly $1 trillion of this money will stay with the insurance companies, which have already paid their executives $548.5 million in bonuses and stock options since the ACA was passed.

Additionally, many corporations such as IBM, GE, and Time Warner have discontinued their retiree health coverage, putting these retirees on private or public exchanges. Some companies are continuing to cover costs, at least in the first year, but over time the taxpayer will absorb the cost of what many corporations used to pay for their retirees.

— The title of the Union Here report is “The Irony of Obamacare: Making Inequality Worse.” Income inequality will be a surprising unintended consequence of this legislation. In the previous paragraph I’ve reported the vast transfer of wealth to corporate shareholders. Union Here represents service workers and it notes that by the end of 2013, nearly 400 organizations made public announcements that they would reduce employee hours to keep them from full-time status where they triggered ACA obligations.

The Robesonian’s front page story on Dec. 20 was about how Robeson County government is doing exactly this. Census Bureau data comparing pre-recession employment to today shows that the top four quintiles of income have all restored their ratio of full-time labor. The bottom quintile shows a drop of 6 percent of jobs working full-time hours.

— I rank this fourth in overall impact, but it certainly has the most dramatic effect on the small number of people affected. The ACA is a tremendous benefit to the segment of the population with serious health conditions who either could not obtain insurance or could only do so at a very high cost. These people often have chronic conditions such as kidney issues or significant diabetes complications. Or, they might have cancer. These individuals are now able to obtain the health care those with insurance receive at a reasonable cost to them. I estimate this group to be about 1 percent of Americans, or 3 million people.

There are several significant effects still to discuss including costs to college students, retirement age of physicians, whether the cost curve will bend and the disappearance of private practices, so I will address these and others next month.

Eric Dent is a business professor at Fayetteville State University who lives in Lumberton.

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