Jonathan Gruber, the economist paid by the White House to consult on the health care reform law, has put out a paper for the Commonwealth Fund that reaches the conclusion that the law is pretty good. What is interesting is that even this supporter and part architect of the law is forced to admit that sick people who actually need care will find getting that care unaffordable under the new law. From the paper:

The results show that an overwhelming majority of households have room in their budgets for the necessities, health insurance premiums, and moderate levels of out-of-pocket costs established by the Affordable Care Act. Fewer than 10 percent of families above the federal poverty level do not have the resources to pay for premiums and typical out-of-pocket costs, even with the subsidies provided by the health reform law. Affordability remains a concern for some families with high out-of-pocket spending, suggesting that this is the major risk to insurance affordability.


Using this method, we find that an overwhelming majority of households do have room in their budgets for the necessities, health insurance premiums, and moderate levels of out-of-pocket costs established by the Affordable Care Act.

I have one big problem with this analysis because the study seems to define “affordable” as having enough money to pay for “necessities” plus health insurance and/or care. First, I find this paycheck-to-paycheck, “no room for anything but making ends meet” definition of “affordability” to be somewhere between misleading and Dickensian, especially because we will require families to spend up to 8 percent on just the premiums.

Second, it seems to leave no room for building up savings. Families making three times the federal poverty line should be able to build up a modest amount of savings for emergencies, job loss, paying down debt, or hard times. Given how politicians from both parties are talking about their desire to cut Social Security and raise the retirement age, Americans who don’t save something for retirement are going to be facing a very difficult future. Building a modest financial cushion and retirement is a necessity.

For the time being, let’s leave aside the problems with the study’s generous definition of “affordable.” The paper admits a significant number who actually get very sick will find the care they actually need unaffordable.


These calculations are for 2014, but the problem will only get much worse moving forward. By design, the affordability subsidies get relatively smaller each year to make the law appear cheaper, so more people each year will find care unaffordable.

Problem when you focus on “coverage” and not affordability

Too much of the health care debate was Democrats trying to claim they will “cover” so many millions more Americans while keeping a low CBO score, but too little focused on actually making care affordable for people who needed it. I don’t really care that the law made private insurance, which is a massive ripoff, “affordable” for the very healthy people the government is going to force to buy it. Healthy people that don’t really need care don’t have trouble affording care.

The real concern should be to make sure Americans don’t need to worry about whether or not they can afford to get sick; in that department, even its supporters admit the Affordable Care Act is lacking. We are going to make people buy insurance they can’t afford to use.

The sad irony of all this is that, for the same amount of money, these serious issues of affordability could have been dealt with much better. If instead of using private insurance exchanges these people could be covered with a Medicare-like public program, that would be roughly 20 percent more cost effective. These huge savings could not only have been used to reduce the portion of income people will need to pay to get insurance, but the money also could have been used to put in place a much lower out-of-pocket cap.

Of course, when it comes to a choice between actually making health care affordable for regular people in need or letting the health care industrial complex continue to rip people off, we know who our politicians are looking out for.