Yesterday, in an interview with NBC’s Chuck Todd, President Obama addressed the problems caused by his incessantly-repeated pledge to the American public that “if you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.” As millions of Americans receive cancellation letters in the mail, however, that pledge looked increasingly strained. “I am sorry that they, you know, are finding themselves in this situation, based on assurances they got from me,” the President said last night. In the course of his interview, however, Mr. Obama made several other misleading statements that don’t accurately reflect Obamacare’s impact on pre-existing health insurance plans.
‘We’re talking about 5 percent of the population.’
In the wake of the cancellation conflagration, the President and his deputies have attempted to minimize the problem by arguing that the failure of the “like your plan” pledge only affects “5 percent of the population”; that is, around two-thirds of the 25 million Americans who shop for coverage on their own. But that’s not true.
As I noted last week, in 2010, the Obama administration estimated that 93 million Americans would be unable to keep their prior health coverage under the narrow grandfathering provisions issued by the administration in June 2010. My colleague Chris Conover estimates that the number is 129 million. And we are here only talking about disruptions to private health plans, and not counting the law’s $716 billion in cuts to Medicare.
The level of disruption in the employer-sponsored market will be less than that in the individual market, where people shop for coverage on their own. But the President is most certainly violating his “like your plan” pledge in the employer-sponsored market, too. For example, employer-sponsored insurance will now have to cover costly, federally-dictated benefits that they did not have to cover before, rendering many plans illegal. Excise taxes on premiums, drugs, and medical devices will drive premiums upward. And the so-called “Cadillac tax” on high-value insurance plans—a meritorious idea—will force a massive restructuring of many coverage arrangements.
It’s for these reasons that Delta Air Lines has said that it will spend $100 million more on health insurance in 2014 than it did in 2013, and why labor unions have complained that Obamacare “will drive the costs of collectively bargained, union administered plans, and other plans that cover unionized workers to unsupportable levels.”
APOTHEFACT CONCLUSION: Obamacare renders illegal the majority of the privately-sponsored health plans in America issued prior to 2014, not merely 5 percent of them.
‘They’ll be able to get better care at the same cost or cheaper.’
As noted above, employer-sponsored health insurance is going to be significantly more expensive under Obamacare than it was before. But the biggest spike in the underlying cost of health insurance will take place in the market for individually-purchased health insurance.
Obamacare forcibly increases the premiums paid by healthy people in order to correct this perceived inequity. And most people are healthy rather than sick, which is why our recent Manhattan Institute analysis of individual-market insurance premiums found that the average state faces a 41 percent increase in rates relative to the old system.
Some of these people—especially older individuals—will benefit from taxpayer-funded subsidies marshaled by the law. But our analysis shows that most Americans will face premium increases, despite the application of subsidies.
And exchange plans will typically have far narrower choices of physicians and hospitals—so-called “narrow networks”—than plans did in the old individual market. While I have no fundamental problem with narrow-network plans, so long as they’re freely chosen by consumers, progressive health wonks rarely argue that narrow networks produce “better care” than broad networks.
APOTHEFACT CONCLUSION: Individual-market health coverage, under Obamacare, will feature plans that are more expensive, with narrower physician networks, than the ones offered under the old system.
‘Women were being charged as much as double compared to men.’
It’s true that, in the individual market, many plans charge women more than men, and there are extreme cases where these premiums are double for women than they are for men. On average, however, the difference is more modest. Our Manhattan Institute survey of pre-ACA premiums finds that for the average 27-year-old, premiums were 25 percent higher for women than men. For 40-year-olds, they were 21 percent higher; and for 64-year-olds, women actually paid 7 percent less than men.
Why does this discrepancy exist? Some people believe it is because women have more health problems than men. Others argue that women are greater consumers of health-care services, irrespective of health status. Either way, Obamacare requires men to spend more on health insurance than they consume in health care, and vice-versa for women. Whether or not you believe this is a good thing, it will be a worse deal for half the population.
APOTHEFACT CONCLUSION: It’s true that women are usually charged more than men for individual-market policies, though it’s rarely “double.” Eliminating that discrepancy, whatever its cause, will make health insurance more expensive for men. And because of other aspects of the law (see above), women will pay more also.
‘Everybody is moving into better plans because they want ’em.’
The President told Chuck Todd this whopper about the design of Obamacare: “What we intended to do…is to make sure that everybody is moving into better plans because they want ’em, as opposed to because they’re forced into it.”
That is, most clearly, not the intention of Obamacare. For years, the President has bragged that his signature health law abolishes plans that don’t live up to the standard that he believes they should meet. “Before the law was passed,” he said earlier in the very same interview, “a lot of these plans, people thought they had insurance coverage. And then they’d find out that they had huge out of pocket expenses. Or women were being charged more than men.”
There are all sorts of insurance practices that Obamacare abolishes, because those practices, in the President’s view, unfairly benefited the healthy at the expense of the sick. If he's right about that—a contestable assertion—than reversing this injustice requires healthy people to pay more, whether they "want" to or not.
And contrary to the President’s assertions, many of the people facing cancellations had good coverage before. “Right now,” wrote Bob Laszewski last month, “I have ‘Cadillac’ health insurance.” Laszewski is being forced to give up his plan for a new one with a $500 higher deductible, a far narrower choice of doctors and hospitals, and a 66 percent higher monthly premium.
And remember that Obamacare contains an individual mandate that forces people to buy these costlier plans, or pay a fine.
APOTHEFACT CONCLUSION: Contra the President, Obamacare was explicitly intended to abolish the old market for individually-purchased health coverage, and replace it with a new, more heavily-regulated one that forces healthier and younger individuals to pay more, whether they want to or not.
‘We’re gonna do everything we can to get [it] fixed.’
If the President is sincerely concerned about the fact that vast numbers of Americans will have their existing coverage arrangements disrupted by his health-care law, there is an easy solution: he can encourage Democrats to support, and sign into law, Sen. Ron Johnson’s two-page bill, the “If You Like your Health Care Plan You Can Keep It Act,” that would solve the problem once and for all.
But the President hasn’t done that. Instead, according to Sam Stein of the Huffington Post, the President is “looking at an administrative fix for the population of people in the individual market who may have an increase in premiums, but don’t get subsidies.” While the details of such a “fix” have yet to be disclosed, it would not honor the President’s pledge that “if you like your plan, you can keep your plan,” though it may help ameliorate the problem of rate shock with the new plans that Obamacare requires everyone to have.
APOTHEFACT CONCLUSION: The President has a clear option available to him if he sincerely wants to “do everything we can” to honor his pledge: sign the Johnson bill. It’s far from clear that he has committed to that.
Some disruption is good
In all of the hubbub around this story, there is one point worth emphasizing. The American health care status quo ante—prior to Obamacare—was no picnic. U.S. government spending on health care, in 2010, was higher per-capita than all but three other countries in the world. Health insurance in America has long been unneccesarily expensive. And it’s a noble goal to ensure that every American is protected from financial ruin due to injury or illness.
Any serious health reform program—left, right, or center—would involve some disruption of our existing health-coverage arrangements. What makes Obamacare such a deeply flawed piece of work is not that it disrupts our existing arrangements, but that it disrupts those arrangements by forcing people to buy costlier coverage.
And not only does Obamacare force people to buy costlier coverage, it most significantly punishes a population that is already disadvantaged in our current system: people of average income who buy coverage on their own, and don’t benefit from the heavy subsidies enjoyed by people with government- or employer-sponsored insurance.
Critics of the President are right to hold him accountable for the inexcusable deception contained in his “like your plan, keep your plan” pledge. But if they in turn promise unrelenting fealty to the status quo, they will doom any efforts to reform our health care system in a better way.
* * *
Follow @Avik on Twitter, Google+, and YouTube, and The Apothecary on Facebook.
Or, sign up to receive a weekly e-mail digest of articles from The Apothecary.
* * *
UPDATE: This piece by former George W. Bush staffer Keith Hennessey is a must-read on how different the Bush and Obama White Houses appear to have vetted their bosses' statements for accuracy and honesty:
As a practical matter we also knew that any overstatement would do far more damage to the President than any temporary rhetorical advantage it might offer. We knew, with certainty, that even the slightest inaccuracy would immediately generate aggressive questions from a press corps that mostly leaned against us. The New York Times at the first opportunity unless others beat them to the punch. We knew we’d then have to help the Press Secretary defend the President’s statement under repeated and ruthless attacks from a press corps that was constantly probing for such weaknesses. If this sounds a tad paranoid, remember the old saying: Just because you’re paranoid doesn’t mean they’re not out to get you. Our relationship with the White House press corps was quite different than that facing Team Obama...
As someone who spent countless hours ensuring Presidential policy accuracy, the idea that an Obama White House staffer would lose such an internal battle, that they would give President Obama a speech staff knew was wrong, is beyond my experience. A White House Chief of Staff who permits President Obama to say something he knows is false violates everything I learned about serving a President. A President must not lie to the American people and Congress about a core element of his signature domestic policy initiative, even if doing so is necessary for that initiative to become law. When he did this, President Obama breached the trust America needs to have in her President.
INVESTORS’ NOTE: The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna (NYSE:AET), Humana (NYSE:HUM), Cigna (NYSE:CI), Molina (NYSE:MOH), WellPoint (NYSE:WLP), and Centene (NYSE:CNC), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.
