Obamacare’s Success in Protecting our Finances

It wasn’t the primary goal, but it’s a big help nonetheless.

One of the critiques we often heard both during and after passage of Obamacare was that health care reform shouldn’t have been the priority while the country was climbing out of the Great Recession. That misses the point that the stimulus package had just been passed and even Democrats were not likely to have backed doing more until it had been fully implemented.

But the critique also misses a point about Obamacare’s impact on our financial challenges. We know that before it passed, healthcare expenses were the leading cause of individual bankruptcies. In addition, the rise in costs were leading to healthcare expenses soaking up unsustainable portions of both state and federal budgets. That is why this statement from members of the Federal Reserve Bank of New York contains some truth.

…the primary purpose of this law [Obamacare} “is not to protect our health per se, but to protect our finances.”

I don’t necessarily agree that protecting our finances was the primary purpose of the law. Ensuring that people had access to health care supersedes all other goals. But it is important to acknowledge that the main reason that was becoming more and more difficult was financial.

The Feds included that statement as a part of their report demonstrating yet another way Obamacare is succeeding.

…they’ve found a big difference between indebtedness trends in states that embraced the Medicaid expansion versus the ones that did not.

The analysts reason that the average amount of debt sent to collections agencies would tend to rise in the event that people without insurance required costly medical attention. Yet, U.S. counties that had a particularly high uninsured rate prior to the implementation of the Affordable Care Act have seen the per capita collection balance fall if their state embraced the Medicaid expansion. If not, the collection balance continued to climb.

While these results are still preliminary, we now can see that Obamacare (via Medicaid and subsidies for low income combined with increased taxes for the wealthy) has not only reduced income inequality, it is probably also reducing the amount of debt low income Americans owe as a result of health care costs. Those are two of the reasons why it is a both/and success for access and affordability.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.