"Not only are premiums lower than they were, they're lower than the most optimistic predictions." —President Obama on Obamacare #CGI2013— Barack Obama (@BarackObama) September 24, 2013
That (quasi) presidential tweet actually contains two wondrous assertions. Let's unpack each one. First of all -- I'm struggling to remember -- what did the "most optimistic predictions" look like again?
Premium decreases of $2,500 per family, per year -- compared to pre-"reform" costs. So premiums are not lower than the president's most optimistic predictions. Not even close. Are premiums lower "than they were" before the law went into effect? Nope. They haven't been so far, nor will they be, post-full implementation. Also, overall national health spending will increase by hundreds of billions more than it would have without the "Affordable" Care Act. And yet, HHS released new data on premium costs with great fanfare earlier today, pretending that most people will be paying less. Health policy analysts at the Manhattan Institute have crunched the numbers, and debunked the administration's happy-talk spin. Avik Roy explains:
“Premiums nationwide will also be around 16 percent lower than originally expected,” HHS cheerfully announces in its press release. But that’s a ruse. HHS compared what the Congressional Budget Office projected rates might look like—in 2016—to its own findings. Neither of those numbers tells you the stat that really matters: how much rates will go up next year, under Obamacare, relative to this year, prior to the law taking effect. Former Congressional Budget Office director Douglas Holtz-Eakin agrees. “There are literally no comparisons to current rates. That is, HHS has chosen to dodge the question of whose rates are going up, and how much. Instead they try to distract with a comparison to a hypothetical number that has nothing to do with the actual experience of real people.”
Roy and his fellow researchers used the administration's own (pretty thin) data to make apples-to-apples comparisons. What will people pay in 2014 compared with what they paid in 2013? Be sure to read Roy's summary of his team's methodology, which actually gives Obamacare an artificial boost, due to the manner in which is scrutinizes the law's effect on prices for average 40-year-olds. Here are some the key stats:
Many 27-year-olds will face steep increases in the underlying cost of individually-purchased insurance under Obamacare. For the states where we have data—the 36 reported by HHS, plus nine others that we had compiled for our map that HHS didn’t report—rates will go up for men by an average of 97 percent; for women, 55 percent ... 40-year-olds, surprisingly, will face a similar picture. The cheapest exchange plan for the average enrollee, compared to what a 40-year-old would pay today, will cost an average of 99 percent more for men, and 62 percent for women.
And the bottom-line conclusion:
For months, we’ve heard about how Obamacare’s trillions in health care subsidies were going to save America from rate shock. It’s not true. If you shop for coverage on your own [through Obamacare's exchanges], you’re likely to see your rates go up, even after accounting for the impact of pre-existing conditions, even after accounting for the impact of subsidies. The Obama administration knows this, which is why its 15-page report makes no mention of premiums for insurance available on today’s market. Silence, they say, speaks louder than words. HHS’ silence on the difference between Obamacare’s insurance premiums and those available today tell you everything you need to know. Rates are going higher. And if you’re healthy, or you’re young, the Obama administration expects you to do your duty and pay up.
If enough young, healthy people decline to perform that "duty," the law's tenuous funding model implodes. An important portion of Roy's determination echoes what analyses by National Journal and Bloomberg have also found: Expensive taxpayer-funded government subsidies will not be sufficient to protect most individual market consumers from premium increases. With less than a week to go until the Obamacare roll-out deadline, the government is facing major logistical glitches, and primary care doctors are "bracing" for a "strained system" that will limit access and care options. I'll leave you with a surprisingly blunt assessment from Politico:
The Obamacare that consumers will finally be able to sign up for next week is a long way from the health plan President Barack Obama first pitched to the nation. Millions of low-income Americans won’t receive coverage. Many workers at small businesses won’t get a choice of insurance plans right away. Large employers won’t need to provide insurance for another year. Far more states than expected won’t run their own insurance marketplaces. And a growing number of workers won’t get to keep their employer-provided coverage.
Ouch. Follow the links within that excerpt, embedded by me, for additional coverage of each of the issues raised.