Dubious State of the Union healthcare claims answered

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In his State of the Union address to Congress on January 20, President Obama made several statements concerning health care. Both his factual claims and his conclusions are dubious, as the following analysis shows.

Paid Family and Sick Leave

The president emphasized the plight of the 43 million American workers who do not have paid sick leave. He proposes to mandate employers provide seven days of paid sick leave to workers each year.

The president didn???t mention an estimated 100 million workers who have paid sick leave likely don???t get seven days annually. He also didn???t mention his own advisor Jonathan Gruber has research showing workers wind up paying the cost of mandatory benefits through lower wages in his paper ???The Incidence of Mandated Employer Provided Coverage.???

If employers are forced to provide seven paid days off of work for every worker, employers will adjust worker pay to compensate for the cost. This will inhibit pay raises, and it will reduce paid vacation days. It could even harm the employment prospects of workers most likely to stay home and care for a sick child, also according to Jonathan Gruber in his paper ???The Incidence of Mandated Maternity Benefits.???

A better idea would have been to call for expanding Health Savings Accounts (HSAs) to all workers, allowing them to set aside funds for medical needs. Another good proposal would be to allow workers to use HSAs to compensate for income lost to sick days without the 20 percent penalty on top of ordinary income taxes they currently face.

Expanded Exchange Coverage

The president touted the fact that millions more people are now covered through employer plans and state or federal health insurance exchanges. However, my own research paper ???Health Exchange Subsidies Will Reduce Employer Health Plans??? shows the exchange subsidies will cause employers to drop coverage

In addition, firms are cutting back workers??? hours to avoid having to provide them with health benefits. Mandatory benefits are not free; workers bear the cost in the form of lower wages and other benefits. Many of these newly covered individuals were not allowed to choose the coverage they would prefer.

Expanded Medicaid Coverage

About 6 million additional people are now covered through Medicaid expansion. However, many of them are finding it difficult to find doctors willing to work for the paltry fees state Medicaid programs pay doctors who treat Medicaid enrollees.

Moreover, the National Center for Policy Analysis has shown in its report ???Exchanging Medicaid for Private Insurance,??? states have alternatives to expanding Medicaid that can help low-income residents access private coverage for very low fees.

Jonathan Gruber also found in his paper ???Does Public Insurance Crowd Out Private Insurance????  that 50-75 percent of new Medicaid enrollees from past expansions dropped private coverage in order to get on Medicaid.

Lower Cost Inflation

The president correctly noted health care inflation is as low as it has been in many years. The reason is because an estimated 35 million Americans either have Health Savings Accounts or Health Reimbursement Arrangements. Millions more have high-deductible plans. The average deductible in an employer plan is now around $1,000, and double that for a family plan.

When more people have some ???skin in the game??? and control more of their medical dollars, doctors and hospitals behave competitively. The president and Congress can build on this cost-conscious behavior. President Obama should make good on his pledge to work with Republicans when they send him bills to reform flaws in the PPACA and reform the U.S. health care system.

Veterans??? Health

The president also correctly noted every veteran deserves access to high-quality health care upon returning to civilian life. Access to quality medical care for our nation???s veterans is currently inadequate. The VA fails to curb suicide risks, for example.

The VA has been plagued by fraud, waste, and mismanagement throughout the Obama presidency. The system is failing those with post-traumatic stress, mental disorders, and traumatic brain injuries. The president should have discussed how his administration would correct these deficiencies.

Precision Medicine Initiative

The president???s proposal to expand personalized medicine is laudable. However, the best way to expand personalized medicine is to boost competition in health care. His administration, by contrast, has routinely championed a top-down approach to medical innovation, assuming engineering can devise the optimal approach to treating disease.

Innovation is best achieved in a competitive marketplace where providers compete to find better solutions and are unobstructed by bureaucratic barriers. Providers???such as doctors and hospitals???can only achieve this in a marketplace where they are competing to attract consumers??? patronage and when patients control more of their own health care dollars.