As the Affordable Care Act (ACA) exchanges get set to open, the right wing media outlets continue to mislead and scare Americans about rising healthcare costs under “Obamacare”. The first lie: As a result of Obamacare, the average family has seen their health care premiums increase by $3,500 a year. So let me understand this – the ACA exchanges and enrollment doesn’t start until October 1st, but insurance premiums for American families have already gone up by $3,500 a year because of Obamacare? Does anyone really believe this nonsense (excluding Fox News viewers)?
Health care costs rose under President Obama – certainly NOT by $3,500 – and significantly LESS during his time in office than they did during Bush’s term:
(From data for annual family premiums from the Kaiser Family Foundation report) During President Bush’s eight years in office, annual average premiums (of heath insurance plans across the board) for a family increased from $7,061 to $13,375, an increase of $6,314 or, on average $789.25 per year. Adjusted for inflation, costs went from $9,313.50 to $14,653.21 or $667.46 per year. When President Obama took office in 2009, annual premiums for a family were $13,375 and four years later have risen to $16,351 for an average of $744 per year. Adjusting for inflation, costs started at $14,653.21 for an average increase of only $424.45 per year. The fact is that the rate of health care cost increases has reversed under President Obama and the President will lower the increases even further via the ACA.
Moreover, the Affordable Care Act was passed in 2010 and the cost-saving components of the Affordable Care Act haven’t even kicked in yet, not to mention that health care exchanges haven’t even opened yet. That said, many state health care exchanges are releasing figures that show much lower premiums than were even estimated. In New York state for example, insurance regulators say they have approved rates for 2014 that are at least 50% lower on average then current. When the exchanges open in October, individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly if you want it. Those that qualify for federal subsidies if eligible, their cost will be even lower. Albeit, to hold down costs some insurers say they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. Hey, having insurance with a limited network of providers is better than having no coverage at all.
The second lie: Fox News and Sean Hannity has been pushing this nonsense that Obamacare will add $7,450 to average health spending for the typical American family of four. I will assume that Hannity picked up that talking point from an article by Forbes contributor Chris Conover, who several days ago published a piece under the title “Obamacare Will Increase Health Spending By $7,450 For A Typical Family Of Four” on Avik Roy’s “The Apothecary” on Forbes.com. Knowing that Mr. Conover works at the American Enterprise Institute, one of the oldest and most influential pro-business ”right-wing” think tanks, I was very skeptical of that figure. So after examining his methodology, I concluded that he either he had very weak math skills or was politically driven working for a right-wing think tank. Likely the later, perhaps both.
So where does Conover go wrong in his methodology? 1) Well first of all, health care costs are not equal for all American families and not all Americans will need insurance. So you cannot take the projected increase over ten years and divide it by “the projected population of the U.S. in 2022” and then multiply it by 4 (typical family) – it’s ludicrous. Why? Because most typical American families already receive healthcare benefits from an employer, they won’t need access to new plans. Moreover, there is also nothing to indicate that Conover considered the subsidies available which would lower the cost even further, assuming the applicant qualifies. What the report by the Center for Medicare and Medicaid Services (CMS) (that Conover’s uses to get to his figure) projects was a .1 percentage point increase in overall spending and the addition of 30 million new customers increasing overall spending by $621 billion. In other words, it’s the addition of 30 million new customers spending roughly $2,000 a year that is the difference. You cannot include the whole population in your figure because the vast majority of Americans are currently covered by their employers. Moreover, the existence of 30 million newly-insured people — by the way, many of whom will receive tax credits if they purchase insurance in the law’s exchanges — won’t do much to move the premiums in one way or another. The bottom line is that the the ACA will raise national health spending a nominal 1 percent which is a lot better then the typical 5 to 7 percent annual growth AND you will also be insuring 30 million Americans.
Right now we do not turn away anyone who comes into an emergency ward who needs emergency treatment. People can choose not to get insurance but who do you think pays for their care when they show up? We all do through taxes and increased insurance premiums.
So Hannity and all you Republicans, stop lying and chins up! Afterall, this was a Heritage Foundation proposal and is it so bad that insurance companies have to compete on a much more level playing field offering the best products at competitive pricing. That’s what the “free market” is all about.