Former Medicare trustee: "People will die" claims "spurious," "fallacious reasoning"

People will die from this policy! We hear this charge thrown around in political debates that it has become cliché to the point of irony, but does it have any basis in reality for health-care policy? Former Medicare and Social Security trustee Charles Blahous offers his reasoned and measured analysis of the claim — and rejects it entirely. Blahous calls it “spurious,” based on a logical fallacy related to the fallacy of composition:

These sensational claims rest on fallacious reasoning, which I’ll describe later in this piece.  But first let’s acknowledge that neither I, you, nor anyone else has any idea how many Americans will live or die under alternative federal health care policies.  It’s an inherently fruitless exercise to attempt to quantify these effects.  However, if one seriously wished to attempt it, one would not do so via the methods now being employed to promulgate the “people will die” claim.

The claims are based on extolling a single effect of the ACA: increasing health insurance coverage, which is said to reduce mortality.

Unfortunately, as Blahous points out, the ACA had a lot of effects — some intended, and some less so. It would be equally easy to claim that ObamaCare is killing people if one employed the same fallacy, which is that an effect on some members of the group means that the policy has the same effect on all members of the group. Blahous points out the deleterious impacts of the Affordable Care Act, even without the evaporation of insurers from the exchanges:

Of course, the ACA didn’t magically produce its coverage increase out of thin air.  To finance it, the law included several features that likely have countervailing effects on mortality. Below is a partial list of such effects, provided with the caveat that it would be just as silly to charge the ACA with killing people as it is to attribute deaths to its possible repeal:

  • CBO found the ACA to reduce economic growth, meaning that as a nation we are collectively poorer because the ACA is on the books. Longevity correlates with income, as lower-income people have shorter lives. Repeal would increase national wealth, which correlates with greater longevity.
  • CBO also found the ACA to reduce workforce participation.  Although there is a fierce national debate over the effects and causes of unemployment, there is broad understanding that unemployment correlates with worsened health.
  • The ACA imposed substantial taxes on medical devices and drugs, inhibiting their development and use.  We do not know how many lives these products would otherwise have saved.
  • Most of the ACA’s coverage expansion occurred through Medicaid, which has a limited supply of providers and services.  Those who gained Medicaid coverage via the ACA gained access to subsidized health services.  But unless the number of providers, facilities and services accessible through Medicaid grew at least as fast as enrollment did, there has been a corresponding reduction in health service availability to people previously on Medicaid.

Now, some people opposed to ObamaCare do claim that it’s killing people, so it’s not entirely a tactic on the Left, but they certainly seem to have cornered the market of late on this ad hominem. It’s not even an argument, but a way to shut down debate over a collapsing command-economy system and what realistically can take its place. There’s certainly room to criticize the alternatives being proposed to the ACA, but this fallacy isn’t criticism as much as it’s the rhetorical equivalent of sticking ones fingers in their ears and shouting gibberish.

Nowhere has this fallacy gotten more play than on proposed changes to the Medicare expansion. Blahous’ final bullet point is a particularly apt answer. In 2015, a study by Health Pocket showed that Medicaid acceptance by providers had dropped twenty-one percent in the first two years of ObamaCare, at the same time that enrollment had massively expanded. This trend existed before the official start of the Medicaid expansion, but it accelerated after the October 2013 launch of the ACA.

Not only did that impact the program’s new enrollees, but also those in the core Medicaid program, who are poorer than the expansion enrollees. My column at The Fiscal Times quotes Blahous in explaining the issue:

Seven years ago, a Democrat-controlled Congress approved the Medicaid expansion for states that adopted it to cover individuals above normal eligibility (up to 138 percent of the poverty line) that the ACA’s insurance exchanges couldn’t easily reach with tax subsidies alone. That added as many as 11 million more Americans to Medicaid rolls, but at a much higher price. The government started off paying 100 percent of the costs from the expansion enrollees in the first three years of the program.

In 2017, the reimbursement rate dropped to 95 percent, and by 2020 it will level off at 90 percent. It created a strange layer of people who get far more direct subsidies on health insurance from Washington than those below them under the poverty line, an artifact of the need to demonstrate a positive reduction in the uninsured.

At the time, the expansion was justified by predictions that getting people into the system would eventually reduce the costs of the expansion. Unfortunately, as Charles Blahous points out this week, the expansion has increased per-person costs, and not in a small way. For 2015 and 2016, actual per-person costs ran sixty percent higher than predicted at the start of the Obamacare/Medicaid expansion implementation. In the most recent report from the Centers for Medicare and Medicaid Services, projected per-person costs for 2022 has now been changed from 2013’s prediction of $4,875 to $7,436 – fifty-two percent higher than predicted.

Blahous also notes another trend in the overlooked actuarial reports. Projected expenditures for the expansion enrollees will grow faster than those in the core program. Rather than serving as a short-term release of pent-up demand, the funding for the expansion will crowd out the resources necessary for those truly in poverty. “In other words,” Blahous writes, “expansion has made Medicaid spending more poorly targeted. We’re already spending a far greater share than expected on Medicaid’s relatively less needy participants, and this poor targeting is expected to grow worse.”

And by adding millions of people to a declining network of providers, the net impact is to make it more difficult for the poor to seek effective and timely medical care. Furthermore, the funds that might have helped the poor are now being distributed in favor of the expansion enrollees. One does not need to say that “PEOPLE WILL DIE!” in order to point out the failure of the ACA’s approach and its distorted outcomes.

But of course, that won’t stop the demagoguery. We posted this earlier in the week, but it’s worth adding Remy’s Reason video here again as a reminder that fallacies can really make people feel good about their own righteousness.