Fact Check - premiums will go up
October 2nd, 2013
06:01 PM ET
10 months ago

Fact Check - premiums will go up

On CNN’s Crossfire Tuesday night, Senator Tom Coburn (R-Okla.) took issue with the context in which new health insurance premiums under Obamacare are being described.

COBURN: … I call it the Affordable Care Act to emphasize that it's not going to be affordable. It's actually going to cost you, if you look at it - all the comparisons made in the press so far are the price of the policy versus what they thought it was going to be, not what you could have gotten before Obamacare.

STABENOW: Well, but...

COBURN: So the real out-of-picket [SIC] - out-of-pocket costs are going to be far greater for the average American under the Affordable Care Act if you don't count subsidy and if you count subsidy.

The Facts
The presentation of states’ new premium data has been all over the map (pardon the pun). States whose leaders are opposed to the ACA have presented their data in a way that makes new premiums look overly burdensome to consumers. Democratic governors in favor of the ACA have presented their state’s premiums in a way that makes them sound like a great benefit to consumers. The Department of Health and Human Services has chosen to use the nonpartisan Congressional Budget Office’s and the Kaiser Family Foundation’s predictions that, as Coburn notes, project that the premiums will be less costly than previously estimated. But that doesn’t help compare new plans to ones available before the health care law took effect.

So where’s the truth?

Like in so many cases, here the truth is hard to calculate. The Affordable Care Act changes the landscape of insurance. The law creates new mandates that require insurance plans cover certain essential benefits, in addition to setting a minimum percentage of the health costs a plan must cover. This means that comparing the cost of plans sanctioned by the ACA to plans offered before the law went into effect isn’t particularly fruitful.

Very low cost, so-called catastrophic plans available in the individual market before the ACA took effect are largely no longer available. Additionally, insurance companies are no longer allowed to advertise low “teaser” rates that balloon when an applicant starts listing personal traits like age, gender and pre-existing health conditions. These tactics by insurers help skew averages of pre-Obamacare premiums, making them appear much lower than they actually are in real life.

In the new system, there are four metal tiers of plans that vary in price from the cheapest, Bronze, that must cover at least 60 percent of all health care costs, to the most expensive, Platinum, that have to cover 90 percent of all costs. Additionally the variation in price based on personal traits are drastically restricted.

The RAND Corporation, a nonprofit research institution, released a lengthy study that tried to compare apples to apples: http://www.rand.org/pubs/research_reports/RR189.html

The study used modeling to look at ten “representative states” as well as the country as a whole. In five of those ten states, RAND finds no increases when the costs of individual plans offered prior to Obamacare are compared to cost estimates for comparable plans offered in the exchanges. Consumers in three states – Minnesota, North Dakota and Ohio – could see their premiums increase by as much as 43%, while in the final two states – Louisiana and New Mexico – consumers could see their premiums decline. Nationwide, the study estimates that premiums will remain stable.

This means that the government’s new coverage mandates may force some consumers to pay more, but the law’s supporters are quick to point out that they’ll be purchasing much more comprehensive insurance. On the other hand, price restrictions and requirements that companies cover everyone regardless of pre-existing conditions means that some people with health problems could wind up paying substantially less.

Finally, none of the study’s cost estimates take into account federal subsidies that will be available to help offset the cost of insurance for lower-income Americans. The study predicts that at least 60 percent of those entering the individual market in the ten states it analyzed will be eligible for federal assistance.


Filed under: Fact Check Obamacare • Health care
soundoff (15 Responses)
  1. Sniffit

    And, of course, CNN does this "fact check" without even mentioning the Kaiser Family Foundation study that came out after the Rand Corporation study and showed that in 15 of the 18 regions it studied, premiums are going to be even lower than CBO projected. Moreover, it showed that regional differences in premium rates can largely be traced to regional differences in the prices charged for services....prices that will start to go down now that everyone is covered and hospitals are being reimbursed by more customers, instead of having to shift costs to the paying customers by jacking up Tylenols to $100 per pill.

    October 2, 2013 06:24 pm at 6:24 pm |
  2. Getoverit

    Just checked out my exchange here in Nevada. For me and my family the cheapest one is $987 a month with a $12,500 deductible. Affordable? Nope. I would pay the penalty.

    October 2, 2013 06:32 pm at 6:32 pm |
  3. A Kickin' Donkey

    I've said it before but will say it again . . .Tthis is one of those headlines that should have a question mark at the end of it. CNN, you really do not come across as even handed with LOADED titles like this one in today's hyper-partisan environment.

    October 2, 2013 06:35 pm at 6:35 pm |
  4. Thomas

    It's a start , we can make it better , improve .

    The UK , Canada had to do the same thing .

    October 2, 2013 07:17 pm at 7:17 pm |
  5. Hal

    My premium, because of the ACA and according to Blue Cross (California) has gone from the current amount of $614 monthly for my wife and I, to $1,155 per month starting Jan 1. My plan, according to Blue Cross, "is pending regulatory review and/or approval in accordance with the ACA." This plan will not be available for financial assistance because it is not purchased through Covered California. I have not been able to to get on the Covered California site to see if any plans with similar coverage are available.

    October 2, 2013 07:38 pm at 7:38 pm |
  6. Rick McDaniel

    Obama has always been a liar, and he lies about every aspect of ObamaCare.

    October 2, 2013 08:17 pm at 8:17 pm |
  7. GOP =Greed Over People

    Mine dropped by 65% and yes, the policy will be much more comprehensive.

    The current on is 363/mo with 2 co-pay doctor's visits and and 10K deductible. This means I pay a copay of 35 for 2 doctor visits per year, to my PCP and 100% of any additional visits, specialists visits, blood tests, any type of diagnostic procedure are all on me 100%. If I were to hit 10K in expenses, then the BCBS of GA policy kicks in and pays a portion(never used it but think it is 70% and I pay the other 30% of additional expenses). There is NO limit on annual out of pocket expenses. Perscription drugs are only paid for if there is a generic version, any name brand is 100%.

    Before you blast me as being a moron for signing up for such a lousy policy, let me say this was the ONLY policy I could get due to HBP which is controllable by medication. Aetna, Cigna and many others would not touch me at ANY price, so I was blessed to get the one for 363/mo!

    The new exchange policy will have a 2500 out of pocket limit(approximately) but comes with much better coverage, no limits on co-pay doctor visits, specialists visits, a copay for all diagnostic tests etc. The new policy is similar in benefits and premium costs to what was available to me when I had a major employer supplied benefits.

    My new premium is 130/mo with the more extensive coverage and due to fixed income and being unemployed I do get tax credits to subsidize the premium.

    And before some of you yammer on about "paying for my premiums" let me just point out, if you own a home, you are getting the same tax credits to "subsidize" your home purchase, so put a sock in it, because I own my own home and no longer have a mortgage to subsidize.

    And for the better part of 40 years, I have paid taxes to educate YOUR progeny and NEVER got to benefit from my taxes to the public education system, Never had kids and at my age not likely to father any in the future. Never whined about it either!

    And again, if your current policy is cheaper, more comprehensive or has a doctor you prefer then by all means, keep it.(and to those stating your premiums went up, I think you are doing a bit of FOX fibbing, the coverages do not go into effect until 1/1/14). If your rates went up 10/1 it was for another reason or you are just a Fox troll repeating sound bites you heard from Rush who dropped out of college his first year!

    But stop disparaging the rest of us because we are not a your same station in life, such as making a nice salary for a large corporate employer.

    And yes I did the "responsible" thing I went to college and got a B.B.A. in Data Processing.

    Unfortunately, COBOL programming is now only taught and coded in India.

    October 2, 2013 08:43 pm at 8:43 pm |
  8. king

    lesson folks obamacare is a money generator and just the thing this economy need to drive jobs jobs jobs. half of my family is working right now because of obamacare and if the repubs want to destroy one of the most money producing entity our country has right now that produces jobs and economy growth, they need to go back to their jerry rigged communities and lay low. folks want to work and dont have to see thousands of dollars shipped to them at home for a short visit at the emergency room.

    October 2, 2013 09:08 pm at 9:08 pm |
  9. GOP =Greed Over People

    P.S. Obamacare(s) has already helped me, as I got a rebate this year, due to BCBS of GA exceeding the 20% of premiums paid going to administrative costs and profits, which is an aspect of Obamacare(s).

    October 2, 2013 09:09 pm at 9:09 pm |
  10. andy

    From the article:
    <>

    Why does the headline say they'll go up?

    October 2, 2013 09:14 pm at 9:14 pm |
  11. boungiorno

    dont complain you knew it was coming

    October 2, 2013 09:23 pm at 9:23 pm |
  12. debbie

    I grew up with a saying in our home that was "it ain't the cost it is the upkeep". This plan is asking for people to budget monthly for an insurance premium. I bet that even if many sign up, very few will be able to keep it up and will pay the penalty instead. In fact,today on Dr. Pinksy(sp)?? he stated that individuals wanted no part of Obamacare because they had to"pay for it"

    October 2, 2013 09:50 pm at 9:50 pm |
  13. Don, thl Toronto

    If I had needed Health Care coverage, I could not wait to get it because the ACA makes it more feasible and net net at a lower cost. I like the fact that those who want to free-load will still contribute whether they like or not by the fine they will have to pay. Those money will be place in the pot to help with the subsidy of the responsible citizens. I am glad that it is the RAND and CBO that shows net decrease accross the country. The Republicans like to refer to the CBO numbers when it is inline with their argument. So I do hope they will not say the numbers from these non-partisan and independent organiztion(s) were skewed. Obamacare is here to stay. No one has to go bankrupt any longer due to illness. This law was long over due even though it would have been good to have government option as part of the package. That will come later once the law is fine tune and the populous sees how well it is working. Rome was not built in a day. Good job Mr. President Obama.

    October 2, 2013 10:00 pm at 10:00 pm |
  14. wendel

    the republicans will try and scare people with miss information. No one has given the plans a chance. Why not wait a year or so and see how it works then make comments.

    October 2, 2013 11:00 pm at 11:00 pm |
  15. timverba

    This is not that difficult to explain. People with insurance are currently paying for the high costs of emergency care of the 30 million people without insurance. Obamacare brings the uninsured under a subsidized insurance policy that is paid by people with insurance. Yes, their premiums rise at first. However, by providing coverage to all. Those who were formerly uninsured are now able to obtain preventive care, which drives the cost of emergency care down, which ultimately lowers premiums.

    Senator Coburn only gives a short term view of Obamacare because has a vested interest in seeing that the poor and minorities not be treated fairly in the marketplace. If the poor and minorities have access to healthcare, then they can compete in the marketplace on equal footing against his favored constituents in Oklahoma. The poor and minorities will be able to pursue a better job or take a risk on a business venture without losing coverage.

    October 2, 2013 11:16 pm at 11:16 pm |