An ongoing series addressing the arguments of my conservative relatives. They’ve drunk of the Tea Party Kool-aid. I despair for them, but I will at least examine the arguments they make to support their views, which is more than they do for me.
For reference, here is the link to the actual text of the ACA:
From now on, any counter-arguments made about the law must contain references to the law. No excuses, I’ve given you the link to the act. I’m digging through it, you can – and should – too.
Of course, in some cases, the actual act doesn’t come into play. In this case, you must cite a study that contradicts the studies cited here. I can be wrong, but only facts will sway me, not links to opinion pieces by conservative pundits.
In this installment, we will analyze an article in Forbes that claims they have a study that shows that the ACA will increase insurance premiums as much as 99% for men. So who authored this study? The Manhattan Institute, a Libertarian think tank. Among its patrons are the infamous Koch brothers.
Based on a Manhattan Institute analysis of the HHS numbers, Obamacare will increase underlying insurance rates for younger men by an average of 97 to 99 percent, and for younger women by an average of 55 to 62 percent. Worst off is North Carolina, which will see individual-market rates triple for women, and quadruple for men.
So there’s the claim. But the article goes on:
“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.
The claim here is that although HHS is saying that premiums are going to be lower than projected, that’s only in comparison to their previous statements on premiums. In other words, the premiums are only lower than projected ACA premium costs, and not 16% lower than pre-ACA health plans.
Here is something to note, right off the bat:
Here is something to note, right off the bat:
Earlier this month, I and two colleagues from the Manhattan Institute… published an interactive map that detailed Obamacare’s impact on individually-purchased health insurance premiums in 13 states plus D.C. As the accompanying article described, Obamacare increased premiums in those states by an average of 24 percent.But those states were largely blue states that had set up their own, state-based insurance exchanges.
I just want to hold on to this: in states that did NOT fully utilize the ACA, premiums are expected to increase an average of 24%. Remember this. It implies that this excessive premium inflation only occurs in states that are not fully implementing the ACA. To me, that indicates that the ACA is having a positive effect, even if it’s less than hoped for.
But here’s the more important omission, and the flaw that basically runs a stake through the heart of this study:
So, we conducted two comparisons between pre-ACA data and post-ACA data, as reported by HHS. The first comparison is between the cheapest plan available to 27-year-olds pre- and post-Obamacare. The second is between the cheapeast plan available to the average exchange participant, and to the typical 40-year-old pre-Obamacare.
On the face of it, it looks, fine, right? Even when you visit the Institute website, we find that indeed, they omitted a key piece of data:
Our pre-ACA dataset consists of the five least expensive plans (by monthly premium) for the most populous zip code in every county. To cover a significant age range we collected rates for 27, 40, and 64-year old male and female non-smokers. We adjusted these rates to take into account those who are denied health insurance coverage as well as those who receive a surcharge. Using the "denial rate" and "surcharge rate" from the federal government's repository, we assumed that those who are surcharged pay 75 percent more and those who are denied, find insurance elsewhere at three times the original rate. We used this to develop a weighted average of the five least expensive insurance plans for every zip code we identified. To develop a state-wide average, we took the state-wide average for every age-gender combination.
Here’s the fatal flaw of this study: while the study does compare the lowest priced available pre-ACA insurance plan against the costs of the lowest-priced post-ACA plan, the study doesn’t actually compare the coverage or benefits of the plans. Nowhere does the study indicate that the plans being compared offered a similar scope of coverage and benefits.
The Kaiser Institute makes this point:
…plans offered in the exchanges –along with coverage sold to individual and small businesses outside the exchanges–must meet several new regulatory requirements. For example,insurers must cover a minimum set of services called essential health benefits…
The Manhattan Institute study didn’t compare premiums on similar plans, they simply compared the lowest priced plans without regard to the difference in coverage. If the pre-ACA plans do not offer the same scope of coverage, no valid comparison actually exists.
It’s like comparing the costs of raisins against apples. A single apple costs many times what a single raisin does. But when you factor in the fact that we eat raisins by the handful, your perception of costs must shift. A serving of raisins costs the same as a serving of apple.
Comparing health insurance plans by premium costs alone without regard for the benefits covered will not yield valid results.
McClatchy News Services took a look at several studies on the effects of premiums by the ACA:
“Our analysis found no widespread trend toward sharply higher prices in the individual market,” said a statement by Christine Eibner, a senior economist at RAND, a non-profit research organization based in Santa Monica, Calif.
“We know what the cost of employer-based insurance is, and these rates are what you’d expect to see for similar benefits,” said Gary Claxton, vice president of the Kaiser Family Foundation. “These rates don’t look to be so high that we should have the sort of widespread sticker shock.”
In a study of 12 states, Avalere found that minimum premiums for a 40-year-old non-smoker averaged $261 for a Silver plan. Maryland had the lowest-cost Silver plan at $197 per month, while Vermont’s lowest-priced Silver plan cost the most at $383.
But McClatchy did include the Manhattan Institute study in their research:
New research by the conservative Manhattan Institute appears to be an outlier. Its report found nine states will see premiums increase, on average, under Obamacare next year, while five others will see average rate declines.
In other words, the Mahattan Institute’s study varies widely from the results of all the other studies.
The New Republic believes that all the studies may be accurate. But it starts by making the point that the premium costs only apply to individual plans, not the group health plans that most of us are part of.
Remember, everything you are about to read is about the “non-group” market only—i.e., it describes changes for people who buy coverage on their own, directly from insurance carriers or through brokers. That’s a relatively small number of people. The vast majority of Americans get insurance through large employers, Medicare, or Medicaid. That's not going to change anytime soon, so none of the following really applies to them
The article then makes the point I just made:
1. Thanks to Obamacare regulations on insurers, the “sticker price” of coverage will go up. Non-group coverage today is usually pretty cheap. One reason is that it frequently has big gaps in coverage—no benefits for maternity or prescription drugs, for example, or deductibles that reach into five figures…Under the law, all plans will include a basic, essential set of benefits—and must be sufficiently generous to cover at least 60 percent of the typical person’s medical bills. (That’s the standard for "bronze" plans. "Silver," "gold," and "platinum" insurance options would cover a greater share of expenses.) Insurers must also sell coverage to anybody who wants it, regardless of medical condition, without raising prices or withholding benefits. These and other requirements make insurance more comprehensive and more widely available, which is what reformers promised to do. But the regulations also make it more expensive.
And this is a fair observation, and it is borne out by the studies. Yes, premiums for individuals is going to go up, but so is what they are getting. And the article goes on to point out something else we should keep in mind:
Under the law, subsidies are generally available to anybody with income that is less than four times the poverty line—which is about $46,000 a year for an individual and $94,000 a year for a family of four. Most Americans make less than that. The amount will vary by income, with poorer people getting more assistance. But among those families receiving assistance, the subsidies will be worth an average of $2,600 per year, according to another recent Kaiser Family Foundation study. That's a lot of money. And remember the subsidies act as discounts: If you are eligible for a subsidy, you don’t have to wait until you file your tax return to get your money back. Instead, the government will calculate your subsidy when you apply for insurance,Conservatives note that subsidies aren’t free: They cost money, which the law generates through a combination of taxes (mostly on wealthy people) and reduced spending (mostly through Medicare paying less for goods and services).
This means that where the Manhattan Institute study may be correct in some instances about how much higher premiums will be, the study did not account for income or the attendant tax credits for individuals in the lower income brackets.
And The New Republic reaches the same conclusion I do:
…the lack of good data on what people pay today makes it almost impossible to be certain how premiums will change, and they're not even sure the comparison is valid. If you're paying more for a more comprehensive and stable insurance policy, does that qualify as "rate shock"? But, when pressed by reporters like me, they say the majority of people will probably end up paying less than they do now, as long as you account for subsidies, Medicaid, and the ability of young adults to enroll in special catastrophic plans or stay on their parents' policies.
But even cheap insurance can seem expensive when you're struggling just to pay other bills. How you react to the new prices will depend a lot on how much you value protection from financial shock and access to medical care—and whether you care about paying a modest penalty for having no insurance.
The bottom line is that three out of four surveys indicate that individual health insurance costs will be lower on average than they were prior to the ACA, when you factor in all the coverage benefits in addition to the mere dollar figure of the monthly premium.
