August 11 2014

He-Said She-Said on ObamaCare Costs

Patrice J. Lee

ObamaCare premiums are on the rise and so are individual healthcare insurance marketplace premiums. Don’t tell that to supporters of the president’s signature law. They would rather pick and choose among the data or try to compare apples to oranges to paint a positive picture of ObamaCare that the facts don’t support.

We’ve regularly reported on insurers across states who are predicting double-digit increases of healthcare costs this fall as they adjust to risk pools that are older and sicker because not enough young, healthy Americans opted to buy into the exchanges.

Recently, a business school professor from California, Anthony Orlando, penned an op-ed in the Sun-Sentinel that challenged data on the affects of ObamaCare. His math lesson is meant to set the record straight on what he considers are a flurry of numbers about the cost of healthcare –some of which he considers are wrong.

Orlando argues that more Americans have access than before, because they can no longer be denied coverage, and that thanks to taxpayer-funded subsidies many people will be paying less so therefore, costs are down. Here’s what he says:

Bottom line: On average, Obamacare clearly lowered the cost of health insurance.

Sure, some people will pay higher rates, but you have to remember those people only paid low rates in the past because insurers were discriminating against sick people. The new market is much fairer and more affordable for more people — a fact that you might want to point out to Republicans on the campaign trail this fall.

If his math doesn’t add up it’s because Orlando is a bit confused himself.

One of the economists whose analysis he picked apart calls him out in Forbes for cherry picking and misunderstanding the analysis he presented.

… Orlando claims that our study’s findings, which examined the effect of Obamacare on individual market premiums, “didn’t match reality,” and dismisses the Wharton study for failing to take into account premiums subsidies. While there are valid criticisms of rate shock rhetoric, Mr. Orlando misrepresents the evidence and ignores other analysis that contradicts his findings, misleading his readers.

The only sensible argument that Orlando puts forward is one that deals with subsidies – indeed, according to HHS, premium subsidies have reduced the premiums that people pay by about 76 percent. Great! But this deals with affordability rather than actual cost. While subsidies make insurance more affordable at the front end, the full cost of insurance has still increased – for taxpayers. Undoubtedly, reform of our antiquated health care system will require some to pay more – indeed, the current tax treatment of health insurance disproportionately benefits higher income families! But costs need not increase as much as they do under Obamacare – and claiming that costs have fallen is deeply disingenuous.

The next few months present both a sprint to the fall midterms and the start of another open enrollment. It’s also a period when Americans will hear from their health insurance companies about changes to their healthcare coverage and costs.

The Administration and supporters of Obamacare will work hard to promote the narrative that ObamaCare is working in covering more Americans – although those people were previously covered and lost their plans or are taking advantage of subsidies – and lowering costs but again because tax-payer dollars are subsidizing those lower costs.

Don’t be fooled. ObamaCare was and still remains a bad deal for the majority of Americans – especially young Americans who must now pay for their elders.

If we want to start talking about costs, let’s talk about the costs to the tax payers, the costs of lower wages and continued unemployment for workers, the added costs for business which they pass on to customers or to workers, and the costs to liberty of every American.

 

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