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 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.