President Obama’s State of the
Union address last night was in no small part an attempt to
rehabilitee himself and his party after the damage done by the
botched rollout of Obamacare. That’s why so little of the speech
was focused on the law, which has never been popular, and has
less so over the last few months.
But he had to say something about his signature
legislation. And so, at the end of a section of providing Americans
financial security, he segued into a brief litany of upbeat
statements about how the law has changed health care for the
better. The problem is that not all of it was exactly true.
For example, he said that the law’s benefits came “while adding
years to Medicare’s finances.” But the only way you get to that
conclusion is through gimmicky double counting. Now, since gimmicky
double counting is how the program keeps track of its trust fund,
Obama’s statement was, on paper, true. But as the Congressional
Budget Office has explained rather clearly, the “savings”
attributed to Medicare’s trust fund are actually the same dollars
being used to finance the law’s coverage expansion.
“To describe the full amount of [Medicare] HI trust fund savings
as both improving the government’s ability to pay future Medicare
benefits and financing new spending outside of Medicare would
essentially double-count a large share of those savings and thus
overstate the improvement in the government’s fiscal position,” the
budget office said
in a 2009 letter. That’s not just CBO’s judgment. It’s also the
position of Medicare’s chief actuary, Richard Foster. While he was
still with the program, he
times that the Medicare savings were basically an illusion
created by the program’s accounting conventions.
A few lines later, Obama also touted enrollment in health
coverage through Obamacare. “Already, because of the Affordable
Care Act, more than three million Americans under age 26 have
gained coverage under their parents’ plans,” he said. “More than
nine million Americans have signed up for private health insurance
or Medicaid coverage.”
The first half is correct. But it’s not right to credit
Obamacare with providing private coverage or Medicaid to more than
nine million Americans.
That number comes from combining the six million people the
federal government says have signed up for Medicaid coverage since
Obamacare’s exchanges went live in October with the three million
people it says have signed up for private coverage.
The Medicaid count dramatically overstates the effect of the
law, however, because it includes people who were already enrolled
in Medicaid and merely renewed their coverage. More than half of
the enrollments in the first two months were in states that didn’t
even participate in the Medicaid expansion.
As Sean Trende recently pointed out, the true number of people
enrolled in Medicaid because of the law is likely an order of
magnitude smaller than these counts suggest.
As for the three million private coverage sign-ups—they’re just
that: sign-ups. It’s the number of people who have selected a plan,
whether or not they have paid a premium. And given the lags and
delays in payment deadlines, it seems safe to assume that
collecting payments has been a bumpy process so far. One
well-connected insurance industry consultant has said that we
expect a 10-20 percent attrition rate as a result of
And of course, none of this tells us how many people are
newly insured as a result of the law. Insurers and
consumer surveys have suggested that the majority of the sign-ups
so far have come from people who already carried health
It’s a sign of how big a disaster the law has been for Obama and
for Democrats that in the same year its biggest changes go into
effect, the most consequential legislative achievement of the Obama
era is shuffled reluctantly into the most high-profile policy
speech of the year. And it’s even more telling that not only does
Obama still have to downplay his signature achievement, he has to
rely on misleading statements to promote it.
from Hit & Run