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

David Simas, Deputy Senior Advisor for Communications & Strategy, tweets (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.

Aetna Letter Warns "Many People Will Pay More For Health Insurance" Under Obamacare

    Aetna, the third largest provider of medical insurance in the country, has mailed a letter to at least some customers this week warning that the "Affordable Care Act (ACA) is changing health insurance" and that "many people will pay more for their health insurance coverage in 2014 than they do today."  The letter is addressed to those whose plans are "non-grandfathered" under the ACA, as explained in a footnote, but says that customers "may have options that could cost less than the higher-priced 2014 plans":

    The White House website continues to claim that "...a family of four [under the ACA] would save as much as $2,300 on their premiums in 2014 compared to what they would have paid without reform," and that it is a "myth that reform will force you out of your current insurance plan..."  As Aetna notes in the letter, information on plan options will not be available until ACA open enrollment nears, October 1, 2013, giving people three months notice about how much more coverage will cost in the new year.

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

W.H. Retweets Article on Rising Insurance Costs

    Today, the White House retweeted a link to an OregonLive.com story on competition among healthcare insurers purportedly instigated by ObamaCare:

Worth a RT. Obamacare beginning to work the way it was intended. Insurers lowering rates because of competition. oregonlive.com/health/index.s…
— David Simas (@Simas44) May 11, 2013

    The story is entitled "Two Oregon insurers rethink 2014 premiums as state posts first-ever rate comparison" and begins as follows:

This is what competition looks like: One health insurer wants to charge $169 a month next year to cover a 40-year-old Portland-area non-smoker. Another wants $422 a month for the same standard plan.
The new health insurance marketplace envisioned by federal health reforms doesn't formally kick in until fall. But it already is taking shape – and consumers for the first time can compare, premium by premium, identical plans by different insurers.

    Some of the insurance players in Oregon give at least partial credit to the new "marketplace" instituted by ObamaCare for lowering the projected 2014 rates for Oregon health insurance consumers:

"Posting rate comparisons company-by-company is a taste of what is to come," says Cheryl Martinis of the Oregon Insurance Division. 

Judging by the reaction, there's already an impact. 

Providence Health Plan on Wednesday asked to lower its requested rates by 15 percent. Gary Walker, a Providence spokesman, says the "primary driver" was a realization that the plan's cost projections were incorrect. But he conceded a desire to be competitive was part of it.

    However, one gets the idea that perhaps the White House retweeted the link without reading the entire article.  Further in the story comes this [emphasis added]:

The easy rate comparison is only one of the changes consumers who buy their own insurance can expect in 2014. 

Another is higher premiums in the 2014 individual market, though for many people they'll be offset by tax credits. The higher rates are because people with pre-existing conditions can no longer be denied coverage. Also, plans have to offer stronger benefits than they used to, leading to higher premiums. 

The changes have spawned much speculation, with some predicting "rate shock" for people who buy their own policies. Now consumers can see for themselves what premiums could be available, at least for certain plans. 

    This might appear to be a classic case of burying the lead.  Competition, yes, but higher rates?  And due to the Affordable Care Act?  However, the article quickly adds the saving grace that may have tipped the scales in the White House retweet decision.  Federal government income-based subsidies of the higher rates :

Meanwhile, at least half the potential customers who buy their own insurance will qualify for a sliding scale of income-based tax credits that could more than-eliminate any price hikes. Nearly 400,000 Oregonians are expected to purchase their own insurance as tax credits lure previously uninsured consumers. 

In addition to comparing insurance plans, Cover Oregon can enroll people and qualify them for tax credits. 

     So, the Obama administration pushed through a 2,800 page piece of legislation that cut consumer choice (I mean "simplified the health insurance system") and raised rates by forcing companies to accept sick customers (I mean "eliminated unfair exclusions for pre-existing conditions") and to offer benefits that not everyone wants or needs (I mean "offer stronger benefits".)  But not to worry.  The government will kick in the difference.  And lower the deficit.  And improve health outcomes.

    What could possibly go wrong?


Note:  This article first appeared at The Weekly Standard.