The flimflam of this week's Obamacare numbers

Reuters News
Posted: Sep 27, 2013 5:26 PM

By Jack Shafer

At midweek, the Department of Health and Human Services released its report on the health plan choices and insurance premiums available under the Affordable Care Act, which opens for enrollment on October 1 in 36 states.

The HHS press release accompanying the report glistened with the positivity of a group hug, starting with its headline, "Significant choice and lower than expected premiums available in the new Health Insurance Marketplace." The press release's feel-good theme of "lower than expected premiums" ricocheted up and down many news columns the next day.

"Cost may be under forecasts"; "Obamacare To Cost Less, Feds Say"; "Rates from insurance exchanges lower than projected for most, HHS says"; and "Report: Georgia Obamacare premiums lower than expected"; read the print headlines in the Dallas Morning News, the Herald News of Passaic County, N.J., the Kansas City Business Journal and the Atlanta Business Chronicle.

The upbeat message prevailed in many of the stories about the HHS report, with the Austin American-Statesman reporting that "premiums could be approximately 16 percent lower than originally expected." (The language in the press release had it only slightly different: "Premiums nationwide will also be around 16 percent lower than originally expected.") CBS News echoed the report, too, stating, "premiums nationwide are expected to be around 16 percent lower than originally predicted," as did the Detroit News and other outlets.

If "lower than expected" sounds like a shady retailer's sales pitch to your ears, you're on my wavelength. "Expected by whom?" is the first question that comes to the clever shopper's mind. The HHS press release and some of the news accounts answer this question: The healthcare prices being showcased by HHS were from a government estimate, as was the previous — and higher — set of numbers, which were projected from Congressional Budget Office calculations (pdf). In other words, the only thing that has changed is the government's best educated guess of what health coverage will cost, state-by-state, in the 36 states where the federal insurance exchanges operate.

The most critical take on the report I encountered was Politico's, which called the new estimate the administration's "carefully selected numbers." Politico maintained, "The report doesn't actually reveal very much about what most people will pay." But Politico wasn't alone. The Associated Press challenged the government's data analysis, reporting, "To get an idea of the true cost of coverage, consumers have to add up premiums and their expected out-of-pocket costs." The AP story quoted a spokesman for Senate Republican leader Mitch McConnell (R-Ky.), who pointed out that premiums that are "lower than projected" are not the same as "lower than they are now."

The Miami Herald had its doubts, too, noting that four insurance plans will be offered by the federal exchange, running from the cheap "bronze" to "silver" and then to "gold" and finally to "platinum," the most expensive tier. "Premium amounts for platinum plans were not provided" in the report, the Herald reported, indicating that the report cherry-picked the numbers. Halfway into its story, the New York Times allowed that, "The figures, almost by definition, provide a favorable view of costs, highlighting the least expensive coverage in each state." The Philadelphia Inquirer similarly dinged the HHS report. "The examples released by the administration Tuesday were for people who are younger than average and are likely to pay cheaper rates," the paper reported, adding, "premiums on the exchanges are likely to be higher in many cases than on the individual market now." Which renders "lower than expected" into a bit of a joke: Everything is lower than expected if your original expectations are high.

The reporters who filed squishy reports, or led with squish, are only partly to blame. According to Politico, the HHS distributed the report to reporters under embargo — which essentially places blinders over their eyes, plugs in their ears, and socks in their mouths. Politico reported:

The report was issued to news organizations on Tuesday under a strict embargo, with specific instructions not to share the information with anyone else, like outside health insurance experts who might be able to provide more analysis of the numbers.

The Richmond Times-Dispatch also cited the meddlesomeness of the embargo, but used a sharp knife rather than a wooden spoon to inflict punishment upon the manipulators at HHS:

The analysis was embargoed for release last night at midnight as part of a public relations run-up to the opening of enrollment in the marketplaces October 1.

Which returns us to the shady retailer metaphor. As scholar Peter Reuter once observed in his timeless essay (pdf), "The (Continued) Vitality of Mythical Numbers," Washington agencies routinely generate numbers to make it appear that the government knows "a great deal more than it actually does." When it comes to the reliability of government predictions — especially positive predictions — your expectations can't be low enough.