ObamaCare's Free Preventive Services Aren't Free


Credit: National Institutes of Health Library / Foter.com / CC BY-NC-SA

As public support for ObamaCare slumps into a post-election decline, the Department of Health and Human Services is trying to convince people that they ought to like the law by noting that it's already given free stuff to a whole bunch of people. An HHS news release this week brags that the "Affordable Care Act extended free preventive care to 71 million Americans with private health insurance" as well as 34 million Medicare Advantage beneficiaries—free benefits the agency says are giving Americans "more value" for their health dollars.

The problem is that the benefits in question are neither "free" nor likely to produce valuable savings. ObamaCare's rules eliminated individual cost-sharing for a number of preventive services, but, as the administration admitted a few months after the law passed, at the cost of higher insurance premiums on average. It's like a gym that suddenly makes all the drinks and snacks at its café "free"—but raises the price of membership. It's not free. You're just paying in a different way.

It's not cost-saving as public policy either, despite initial Democratic hopes that it would be. In fact, most evidence shows that it increases health spending. That's because eliminating cost-sharing increases utilization of preventive services; when there's no immediate price to pay for using a service, people tend to use more of it. And as the Congressional Budget Office reported back in 2009, "the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall." In general, the CBO noted, researchers have found that "the added costs of widespread use of preventive services tend to exceed the savings from averted illness."

For preventive services to have the largest benefits relative to costs, the CBO explained, the prevention efforts need to be narrowly targeted at only a few people who are likely to develop a particular ailment. The HHS claim that 105 million people took advantage of ObamaCare's "free" services suggests that there was not much targeting involved. Instead, the law took a broad-brush approach that likely raised insurance premiums for many and perhaps most of the individuals affected. But I suppose "Affordable Care Act shifts costs and raises premiums for 71 million Americans with private health insurance" doesn't make quite as good a press release.