Parnell has done extensive work on health care, both at the policy and consumer levels. He is the author of The Self-Pay Patient: Affordable Healthcare Choices in the Age of Obamacare and runs the blog The Self-Pay Patient, and has written health policy papers for several think tanks. He also provides lobbying, fundraising, outreach, and strategic consulting services for a number of clients. He lives in Alexandria, Virginia with his wife Anne and son Ryan.
- Obamacare Anniversary Nothing to Celebrate - April 4, 2015
- Heartland Daily Podcast – Devon Herrick: 5th Anniversary of Obamacare - April 3, 2015
- Obamacare Flying Machine Begins a Death Spiral - March 28, 2015
Much has been made in recent days and weeks over the news that insurance premiums under Obamacare are ‘less than expected.’ Here’s a fairly typical example:
HHS: Premiums under ObamaCare lower than expected
The Obama administration on Thursday highlighted lower-than-expected premiums for healthcare plans sold through ObamaCare’s new insurance marketplaces.
In the 11 states that have released rates for next year, premiums for a middle-of-the-road plan are an average of 18 percent cheaper than the Congressional Budget Office had expected.
The Health and Human Services Department highlighted the rate information in a new report Thursday, just as President Obama was set to deliver a speech highlighting the law’s savings to consumers.
To anyone who follows public policy seriously, this seems like a pretty odd benchmark for success. The point of the Affordable Care Act, as I understood it from the supporters, was to make care more, well, affordable. Wouldn’t the appropriate comparison be to current premiums? Of course, under that comparison, the “success” of Obamacare isn’t quite so apparent (numerous people have documented the skyrocketing premiums in most states, the Manhattan Institute’s Avik Roy probably first and foremost, read his analysis of California for a sample of his work).
The confusion of reality and projections seems part and parcel of the public policy worldview of those continually arguing for larger, more expensive government and a less robust and free market. Consider climate change, where alarmists continually tout complex computer models projecting global temperatures decades and centuries into the future. Advocates for “doing something” inevitably cite these projections as “proof” that severe climate change is a crisis in the making that only central planning and energy rationing can solve.
Of course, the projections of these computer models haven’t quite come true, as anybody who’s seen global temperature data for the past 15 years can tell you. Over at WattsUpWithThat.com they’ve got an excellent writeup on the divergence between reality and projections, Climate modeling EPIC FAIL – Spencer: ‘the day of reckoning has arrived’.
None of which has diminished climate alarmists insistence that public policy should be based on their projections rather than the actual science of observed data, of course.
Which brings me to the final example of using projections to either define politically inconvenient problems away (skyrocketing insurance premiums under Obamacare) or “prove” that a problem exists requiring massive expansions of government power and curtailment of freedom, a comment by Paul Krugman in today’s New York Times.
In a piece called Detroit is not Greece (I’m pretty sure he also doesn’t believe Greece is Greece either, a topic for another day), Krugman notes regarding U.S. debt and deficits that “…now deficit scolds have a new case to misinterpret. Never mind the repeated failure of the predicted U.S. fiscal crisis to materialize, the sharp fall in predicted U.S. debt levels and the way much of the research the scolds used to justify their scolding has been discredited…”
I’ve heard this line of thinking for several months now, including several op-eds and news articles saying (or quoting people saying) in effect that the budget deficit problem is solved, nothing to see here, move along. I don’t doubt that predicted U.S. debt levels have fallen, but as you may have guessed, I’m skeptical about predictions, especially those made by fans of bigger government and less freedom.
I took a look at the link Krugman provided for his assertion, and it goes to the Web site of the Center on Budget and Policy Priorities (CBPP), a left-wing group whose research I usually find to be reasonably decent. They helpfully include a spreadsheet showing the assumptions behind the prediction of a “sharp fall” in U.S. debt (it should be noted that their calculations are based on Congressional Budget Office data, so I’m not picking on CBPP here).
By looking at the spreadsheet, it becomes clear what the central assumption is behind the prediction of a “sharp fall” in U.S. debt is – economic growth at a rate the country hasn’t seen for nearly a decade and a half. From 2015 through 2018 growth is projected to be between 5% and 6.5%, and from 2019 through 2023, growth is projected to be in the neighborhood of 4.25% to 4.5%. By way of reference, for the last decade growth in the U.S. was briefly above 4% once, in 2004, and hasn’t exceeded 3% since 2005. Economic growth has been around 2% over the past several years of the “recovery” (the White House predicted growth over the last few years to be in the 2.7% to 5% range)
It’s obviously important to rely on projections in public policy discussions when trying to make plans for the future and understand what challenges and opportunities lie ahead, but it’s just as important to understand what the assumptions are underneath those projections and to assess how reliable and realistic they are. It’s easy to see how projections of 4.5 – 6.5% economic growth over the next decade might fail to materialize, meaning that the “sharp fall” in U.S. debt is likely to closely resemble the last 15 years of rising global temperatures that nobody seems to be able to find.
