Monday, September 2, 2013

White House Spins Article About 34% Increase in Ohio Healthcare Premiums As Good News

David Simas, Deputy Senior Advisor for Communications & Strategytweets (and White House retweets) a link to an article with “More good ACA [Obamacare] news. 21% savings on premiums for Ohioans who buy their own health insurance because of the ACA.”

Indeed, the article begins: “Ohioans who buy their own health insurance should see an average out-of-pocket savings on premiums of 21 percent because of taxpayer subsidies under the Affordable Care Act, according to a new study by the Rand Corp., a widely respected think tank.”

But the 21% is not a savings over current premium levels, but projected increased premiums [emphasis added]:

Christine Eibner, a senior Rand economist and lead author of the study, told us in a telephone interview this afternoon that she considers this is a realistic way of comparing premiums. It compares premiums for coverage people will get on the exchange with coverage they have or would have had without Obamacare.

Based on that calculation, the average premium for individual policies in Ohio would rise by $900, or 22.65 percent...

The price hike would be offset for many Ohioans by the taxpayer subsidy.
So the 21% “savings” doesn’t actually even quite make up for the 22.65 percent increase in average premiums.  And the savings are only for those getting subsidies.  Those paying the full premium themselves will get hit with the full 22.65 percent increase.

It should be noted also that the increase in the raw comparison of premiums, before Rand adjusted for what it considered pertinent factors, was even higher:

Without factoring in subsidy offsets and the policies that people are likely to buy, premiums for individual policies in Ohio will average $5,312 in 2016, according to figures from Rand. That’s 34 percent higher than the average for individual premiums without Obamacare, Rand’s figures show.  But that, too, is a high estimate that does not factor what kind of coverage people will actually buy on the exchange...
And this is the kind of article the Obama administration considers good news worth promoting.

Note: A version of this article first appeared at The Weekly Standard.

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