Last week, I was talking with a new acquaintance about
health and mental health policy.
He was a successful businessperson, smart, very well educated,
and well-informed about public policy.
Like most of us, he follows the news about Obamacare closely. And he has strong opinions about it.
But I realized as we talked that there were things he
thought he knew about Obamacare that were not actually true. But we both had heard them many times before.
So here are five often-repeated “facts” about Obamacare that you, too, have
probably heard, and happen to be wrong.
1. The Affordable Care Act was supposed to reduce
health care costs significantly.
Untrue – when the Affordable Care Act was passed, the Congressional
Budget Office projected that it would cost more than $1.2 trillion over ten
years. After the Supreme Court decision
in 2012, CBO lowered its projection to under $1.2 trillion. (When these numbers were updated in 2013, they did not
change dramatically.)
The cost of doing nothing was greater – but not by
much. Repealing the Act would cost
around $10 billion a year, or less than ten percent more. So the Affordable Care Act “savings” were always
pretty small.
But even those savings were optimistic. They were based on an assumption that Medicare
would cut doctors’ fees by 30 percent – something no one thought would happen.
So the truth is that while some healthcare system costs may
be less under the Affordable Care Act, overall the law was intended to be cost
neutral.
2. The Affordable Care Act has failed because it
has not lowered large employer-based group health insurance premiums this year.
Untrue – the Affordable Care Act was never intended to lower
the sticker price of any insurance premium. It was only intended to lower the net cost
for individual and small group plans by giving tax credits to individuals who
(1) earn between 100 percent and 400 percent of poverty and (2) buy their own
insurance.
What ACA did for everyone else was to make sure that they
got more for their money by introducing a new set of consumer protections (including
minimum loss ratios, coverage for pre-existing conditions, and no cancellations
when people get sick) that were not previously guaranteed by federal law or all
state regulators.
3. Under the Affordable Care Act, many working
middle-class individuals are still faced with unaffordable health insurance
premiums.
My acquaintance talked about the huge burden faced by
workers who are paid $35,000 per year – a decent wage, but not an easy one to
live on. He didn’t believe me when I
told him that a family of three earning $35,000 could get a “silver” plan –
probably comparable to what many large employers offer – for between $100 and
$200 per month.
So here’s a link to prove it. According to the Kaiser
Family Foundation’s insurance subsidy calculator, a family of three earning
$35,000 per year in my zip code will pay, on average, $156 per month (net) for
a silver plan that costs $6641 on the open market. And if they choose a bronze plan, it will
cost them nothing. And in my county there
are over one hundred approved plans from which to choose.
4. The Affordable Care Act was supposed to
prevent insurance companies from ever changing or dropping plans again.
Also untrue – but President Obama did famously declare that
you could keep your plan if you liked it.
He apparently assumed that people understood that he was making two
assumptions here – that the plan met the minimum standards set by the new law, and
that the insurance company was still willing to offer it.
And that leads to the fifth and final “fact” you’ve heard
that isn’t true.
5. The Affordable
Care Act is at least in part a government takeover of the health care financing
and delivery system.
Untrue again – because if it had been, you probably would
have been able to keep your existing plan, because the government could have forced
your insurer to continue to offer it.
So what is the truth about the Affordable Care Act?
It is simply this – Obamacare is a balanced approach to reducing
the number of uninsured people through a combination of expanded public welfare
programs, subsidies to lower and middle class individuals, and private
insurance market regulatory reforms.
That’s all. And that’s
a fact. And its success will be judged ultimately
on how well it accomplishes this goal.
And if you want to know how that’s going, click here
for the January 2014 federal report or take a look at the chart accompanying this
column.
Paul Gionfriddo via email: gionfriddopaul@gmail.com. Twitter: @pgionfriddo. Facebook: www.facebook.com/paul.gionfriddo. LinkedIn: www.linkedin.com/in/paulgionfriddo/
I received a comment from "anonymous" that read in part: "Number 3 is UNTRUE. The worker with a $35,000 a year job that offers "affordable" health insurance will not be elgible for any subsity." I decided not to post it in its entirety for two reasons - the first is that it is unsigned, and the second is that it included a word that is disparaging to people with mental illness that I found offensive. But the part I've included is worthy of a response, because Anonymous makes an assumption that is yet another frequently-heard, but fake, fact about the Affordable Care Act - that exchange insurance was intended to replace existing employer-based group health insurance. The worker who is already covered by insurance was never intended to be affected by the subsidy provisions of Obamacare, only the consumer protections. (See Fake Fact #2 again.) In #3, I was referring to workers who are not, or will no longer be, covered by group plans. And the numbers I used are accurate, and no doubt as surprising to others as they were to Anonymous. I hope this clears up Anonymous's confusion. And I am happy to post complete comments; just not if they are both unsigned and gratuitously insulting to anyone.
ReplyDeleteI am not confused. My employer offers coverage, my individual coverage is just under 10% of my gross salary. Employer based Coverage for my family would over 20% of my gross income. The household income = approx 300% FPL. We purchased a "junk" insurance plan with a high deductable for about 220 per month. A new bronze plan with the same deductable and same basic coverage will now cost over $400 per month. Thanks Obama, Thanks for nothing!
ReplyDeleteHere are the mounting problems for Anonymous. First, his/her employer offers coverage, which means he/she does not have access to the subsidies - and was never intended to. Second, the employer offers a plan for the employee that would cost 20% of gross income for the family. If the employer did not offer that coverage and the family were eligible to purchase on the exchange, then he/she could thank Obama - the price of the insurance would be capped at 9.5 percent of income (half of what the employer-based insurance is costing. So, third, Anonymous has to buy a second policy for the family, which costs another $220 per month. A comparable policy for the whole family (3 people) - if it were available to them through the exchange - would cost $369, assuming an income of 300% of poverty (around $59,000 per year). So, yes, Anonymous is justified in saying thanks for nothing, but not for the reason he/she thinks. A lousy employer-based insurance deal is and has always been between him/her and the employer - not between him/her and the government. Maybe Congress should have changed that, but the Affordable Care Act was never intended to be a government takeover of the private insurance industry.
ReplyDeleteHere is what the "truth of the Affordable Care Act" is for me. My policy was cancelled. The exchange plan offered to me and my family that is the equivalent of what I am paying now on the individual market is $350 more per month then what I'm paying now. If I want the bare minimum plan offered on the exchange, it's still $150 more per month then what I'm paying now. Why do I get the feeling I'm paying for everyone else? Oh, because I am. Go ahead and spin that one.
ReplyDeleteThank you for continuing the dialogue. Sorry your plan was cancelled, but that isn't really the fault of the new law. It was never designed to prevent insurers from cancelling entire plans (but it does penalize some employers who drop them). It just required that they offer plans that met minimum coverage standards and protected consumers in certain other ways. There's really nothing to spin here about your final point, because that's what insurance is. You are paying for everyone else who has your plan and is sick, just as they will all pay for you when you get sick and receive care. Plan pricing is based on what it costs for the care of the group. If you think your plan isn't doing that, you should contact your insurance commissioner. At least under Obamacare, if your insurance company overcharges you (in other words, it doesn't pay out at least 80-85 cents for every dollar it brings in), you get a rebate at the end of the year. That wasn't the case before the Affordable Care Act.
ReplyDeleteIt is the fault of the new law. If there was no Affordable Care Act, I would not have gotten my plan cancelled. You can't blame insurance companies for dropping plans because they are being forced to revise their plans to meet new government regulations. ( again, the unintended consequence of the new law) I understand that I am paying for everyone else who is sick, as they will pay for me. However, There are people who aren't paying anything for health care, and those are the people I was referring to. I know exactly what insurance is. Your quote:" plan pricing is based on what it costs for the care of the group". But now it's the care of "everyone". Therefore the extra $350 dollars a month I am paying does not go to benefit me or the other people paying more premiums in my group plan, it goes directly to those people receiving subsidies. Period.
ReplyDeleteThank you again for the spirited debate, and in helping to expose so many of the "fake facts" about Obamacare. There are two more to clarify - subsidizing the uninsured did not begin with ACA, and forcing insurers to fix or drop plans that did not meet minimum standards was an intended (not an unintended) consequence of the new law. And your unsubsidized premium price does reflect what your own group, not the whole population, will cost. I guess we'll just leave it at that, And please understand, I haven't been trying to convince you to like the law (I also think there were better ways to do this), just to see it more clearly.
ReplyDelete