When you get an envelope from your insurance company, it can contain a variety of surprises. Sometimes a check falls out. The claim was paid quickly—and they covered more than you expected. This is rare. More often you open the envelope and unfurl a multipage form that reads “this is not a check and isn’t likely to be a check any time soon.” That isn’t the literal wording, but it’s the reasonable conclusion you reach after trying to parse the jargon, following the code at the bottom of the page, and reading the grayed out boilerplate on the back of the letter. Or, you get a notice from your insurance company telling you that your coverage is going to change. You don’t know exactly what that means, but you’re pretty sure that it won’t lead to more happy surprises in the future.
These types of experiences have their analogue in the life of the Affordable Care Act. As it has come into being, the legislation has delivered both good and bad surprises. Recently the big surprises have been bad. The website didn’t work, portions of the law had to be delayed, people who were promised they could keep their coverage couldn’t, and there have been headaches for those who have signed up that have continued beyond the website. On Tuesday the administration had to manage another surprise when the Congressional Budget Office predicted the Affordable Care Act would have a “substantially larger” impact on the labor market than it had previously expected: The law would reduce the workforce in 2021 by the equivalent of 2.3 million full-time workers, three times more than the 800,000 originally anticipated.
Debate immediately raged over what that number really meant. It didn’t mean that 2.3 million jobs were being lost, which is how ACA opponents framed the news. The CBO said this explicitly and Republican Budget Chairman Paul Ryan was clear to make this case too at his hearing with the CBO director Wednesday. The law would lead to a reduction in hours, which would come from people choosing not to work.
So one parent in a couple could stop working so hard to get health insurance, replacing those hours spent at the office with time at home with the kids. Older workers who risk their health to keep working to get benefits could stop. But not all of the decisions will be voluntary. People who want to work more won’t work because as they earn more, their subsidy will decrease, creating a tax. That is a natural result of any social policy where benefits taper off as wages increase. The news ratified the longstanding claims by opponents of the ACA that the law would change the incentives for work—in this case trading work for a new entitlement.
The Congressional Budget Office did not try to parse out exactly how many of the fewer hours will be a choice people will be happy about and how many will be a choice forced on them. As the report says, “The CBO’s estimate of the ACA’s impact on labor markets is subject to substantial uncertainty, which arises in part because many of the ACA’s provisions have never been implemented on such a broad scale and in part because available estimates of many key responses vary considerably.” In other words: Big surprises are coming. Regardless of where you come down on the specifics of the report—will it mean job losses or greater flexibility—the report was a reminder that when you unleash a law that affects this much of the economy, it creates a lot of uncertainty.
In this specific instance, the CBO says the uncertainty described in its report will fall on a lot of lower-income people who might very well be happy they have insurance for the first time in their lives. They may also be healthier people—the report is predicting behavior several years from now—since these people will have been covered for a few years and perhaps taken advantage of preventive care. So as a political matter, the people directly affected by the policy may reward the politicians who brought it to them.
But what about the people not necessarily affected by the law but worried about the uncertainty? This group involves those with high incomes who won’t receive subsidies or who already have policies. They won’t be affected by the subsidies that play the largest role in the changes the CBO is predicting, but that may not reduce their political nervousness. These voters are a problem today for the reason they always have been: They see the ACA not as an engine of great new benefits but as an unpredictable force that could disrupt the coverage that they have. The CBO report—and the reaction to it—reanimates their underlying fear about the law: When the government initiates huge changes, it creates tremors that may affect me even though I was promised they wouldn’t.
This is the fix for Democrats running for re-election during the Affordable Care Act rollout. They can find information in the CBO report that helps their case, like the fact that the law has led to no increase in part-time work as detractors have prophesied or that the provision Republicans bash as an “insurance company bailout” actually brings in money, but they also have to address every new round of jitters, which cannot simply be dismissed as the creation of partisan Republicans.
One sensible approach might be to wait until the law is implemented and stop jumping at the smallest hints about what the future might hold. Or we could at least wait for insurance companies to publish their new premium costs in May. Then we’ll know if the law is causing prices to increase. Or we could wait until the fall to see how many more people are now insured. Then we can use that data to make a claim about whether the whole thing was worth it.
That case for patience is one that administration advisers are making, but they are on shaky ground since they have been projecting their own sense of false certainty about the future, too. After a string of bad ACA surprises, administration officials started touting a good surprise: Health care costs have been declining because of the law, they say. A check may not have fallen out of your last envelope, but the check is in the mail … really.
The problem with this nice surprise is that it requires a mix of optimism and creative thinking. It’s clear that health care expenditures have slowed, but a 2013 Kaiser study said the majority of the reduction in health spending came from the recession, not the ACA. Medicare actuaries reached the same conclusion: “There is no discernible impact of the [ACA] legislation on aggregate health spending trends.” The administration’s case, which can be found here, relies on a different way of measuring health care costs.
If the administration is going to make a case about the future of health care costs based on evanescent evidence, then it can’t complain about people who see doom in these new CBO numbers. The best the administration can argue is that we don’t know what the future holds, but that’s not likely to calm people’s jitters about what might appear in tomorrow’s envelope.