Busting Zombie Obamacare Myths

The GOP effort to defund Obamacare has brought back many misconceptions about the law.

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The Republican effort to defund or delay health care reform at any cost has kept alive many misconceptions and false claims about the Affordable Care Act. This roundup of Center on Budget and Policy Priorities' work on issues related to health reform and the federal government shutdown provides a large dose of reality.

A delay in the individual mandate is neither harmless nor fair: Let's start with the big one: that a one-year delay in the individual mandate requiring everyone to acquire health insurance as long as it is affordable is harmless and fair because the Obama administration delayed for a year the requirement that large employers provide health insurance or pay a penalty. I discussed some flaws in that argument in an earlier post on this blog.

In CBPP's shutdown roundup, Edwin Park reiterates why a delay in the individual mandate is neither harmless nor fair. It's not harmless because it would cause 11 million more Americans to remain uninsured in 2014 and result in higher premiums in the individual market for many others, according to the Congressional Budget Office. It also would disrupt the new health insurance exchanges and likely delay the availability of coverage through the exchanges.

[See a collection of political cartoons on the government shutdown.]

It's also not fair to equate delay of the individual mandate to a delay in the employer requirement. Park highlights an Urban Institute analysis which showed that the employer delay would have only a small effect on the coverage gains expected under the ACA and which concluded that it would "be dangerously wrong" to assume a similarly small effect from a delay of the individual mandate. Similarly, CBO estimates that delaying the employer requirement would increase the number of uninsured by less than 500,000 – a far cry from the estimated 11 million increase from delaying the individual mandate.

The ACA will not likely cause a significant shift to part-time work: The employer responsibility provision whose implementation was delayed until 2015 requires larger employers (those with at least 50 full-time-equivalent workers) to offer health coverage to their full-time employees (those working 30 or more hours a week) or pay a penalty. Critics claim that we could already see a shift to part-time work in the data before the announced delay. Some have argued that the cutoff for defining full-time work should go from 30 hours a week to 40.

In CBPP's shutdown roundup, Paul Van de Water shows that data this year provides scant evidence of a significant shift toward part-time work and that there's every reason to believe that the ultimate effect will be small as a share of total employment. Van de Water shows, however, that raising the threshold from 30 to 40 hours a week would expose a significant number of workers to a reduction in hours.

[See a collection of political cartoons on the economy.]

Medical device manufacturers are unlikely to lose from the ACA despite a tax: A strong lobbying effort is underway to repeal the ACA's 2.3 percent tax on certain medical devices such as coronary stents, artificial knees and hips, cardiac pacemakers, irradiation equipment and imaging technology. In the CBPP roundup, Paul Van de Water explains why that tax, which helps pay for extending health coverage to millions of uninsured Americans, is sound and the arguments against it are not.    

First, the tax does not apply to wheelchairs, eyeglasses and other devices that the public generally buys at retail and for individual use. Second, the tax is levied on equipment that manufacturers will likely see a boost in revenue from due to the increase in health coverage afforded by the ACA. As Van de Water points out, a study by Wells Fargo Securities finds that health reform will increase device sales by 1.5 percent in 2014 and by 3.6 percent cumulatively through 2022 – enough to offset the tax. 

Finally, this is a highly profitable industry, and the stock prices of the top device manufacturers have generally outperformed market averages since the tax was introduced this year.

The ACA is a major piece of legislation with many interrelated moving parts, and there will be some glitches along the way as it's implemented. But the criticisms we're hearing in the current budget fight are way off base.             

Chad Stone is chief economist at the Center on Budget and Policy Priorities.

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  • Corrected on : Corrected 10/4/13: An earlier version of this post incorrectly stated the number of people the Congressional Budget Office estimates would be uninsured without the individual mandate. It’s 11 million.