Obama’s Unaffordable Act

Obama’s Unaffordable Act
June 24, 2013

Peter Ferrara

Peter Ferrara is senior fellow for entitlement and budget policy at The Heartland Institute, a... (read full bio)

When he was campaigning for President in 2008, President Obama told the American people his health reform plan would reduce family health insurance premiums by $2,500 a year. But I knew then, and now we know he did too, that just the opposite would be true.

Earlier this month, on a campaign swing through California, President Obama said regarding the insurance company premium bids that are starting to come through on the Obamacare state Exchanges for providing the required Obamacare coverage, “This is the way that the law was designed to work. But since everybody’s been saying how it’s not going to happen, I think it’s important for us to recognize and acknowledge, this is working the way it’s supposed to.”

So how is Obamacare working, based on the early returns?

Calculated Deception and The Unaffordable Care Act The first bids widely reported came into the California Obamacare state Exchange — Covered California. But those bids were reported publicly by the Exchange in a very misleading way (here and here). The Covered California press release stated: “The rates submitted to Covered California for the 2014 individual market ranged from 2 percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

If you don’t read that sentence carefully, you may miss the trick that is being played on you. Instead of comparing the 2014 premiums under Obamacare for health insurance sold in the individual market in California to the 2013 premiums for health insurance sold in the individual market in California, which would be comparing apples to apples, the statement does something else. It compares the 2014 premiums under Obamacare for health insurance sold in the individual market in California to the 2013 premiums for “small employer plans” sold to employers in California.

That is like comparing the prices for laundry detergent sold to consumers for use in their homes to prices for industrial strength detergent sold to businesses for cleaning responsibilities in operating their businesses. Or it is like a Chevy dealer in a year when the prices for Chevys have soared issuing a press release that says, “The prices for 2014 Chevy cars and trucks ranged from 2 percent above to 29 percent below the 2013 average prices for Lincoln Town cars sold to limousine services and dump trucks sold to construction companies.” What consumers want to know is how the prices for 2014 Chevys compare to the prices for 2013 Chevys. That would be comparing apples to apples.

The voting public, in fact, should be greatly angered that their public servants, like those running the California Obamacare Exchange, would talk to them in this very misleading way. We rightly expect our government officials to talk to us in an honest, straightforward manner, not like used car dealers trying to manipulate us and trick us.

The same goes for public commentators for major media institutions. But instead of illuminating for their readers the gross distortion in the Covered California press release regarding the 2014 Obamacare health insurance premiums for the individual market in California, commentators like Paul Krugman of the New York Times, and Rick Ungar, who serves as a token liberal for Forbes, played along with the distortion. They reported to their readers that the 2014 California health insurance premiums for the individual market under Obamacare were surprisingly, even shockingly, much lower than expected, and showed that Obamacare was going to be a great success, contrary to all the “right wing” criticism that has been hurled at the great social advancement that is Obamacare.

Of course, Krugman and the New York Times are hardened, far left institutions devoted to misleading the public in devotion to the great socialist cause. But Ungar should understand that you can be a liberal in favor of “universal coverage” for health care and other assistance for the poor and needy. But that doesn’t mean that you have to play along with and use your column to perpetuate dishonesties and distortions advanced by other “liberals” and socialist propagandists. I would consider it equally inappropriate, for example, for conservative Republican commentators to argue that President George W. Bush kept federal spending under control, or that the cheap dollar monetary policies that his Treasury Secretaries encouraged the Federal Reserve to pursue did not contribute to the 2008 financial crisis. I have criticized Bush for these failings myself in published columns.

It was left to Forbes health care columnist Avik Roy to reveal the truth about the Obamacare health insurance premiums for the individual health insurance market in California. He compared the 2014 Obamacare premiums for the individual health insurance market in California to the pre-Obamacare 2013 health insurance premiums for the individual health insurance market in California, as revealed on the private sector health insurance exchange eHealthInsurance. Roy found that in California, “Obamacare, in fact, will increase individual-market premiums by as much as 146 percent.” Ooopsie!

Roy explained, “[F]or the typical 25 year old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.” He added that for a 40-year-old male non-smoker in California, “Obamacare will increase individual-market premiums by an average of 116 percent.” Roy concluded, “For both 25-year-olds and 40-year-olds, then, Californians under Obamacare who buy insurance for themselves will see their insurance premiums double.”

It is important to understand the back and forth of this argument, because it helps to reveal why our democracy is not working anymore. Not content at having been so publicly corrected, Ungar responded in his next column with Saul Alinsky style ridicule, saying, “my first reaction was to laugh. eHealthInsurance.com? Seriously?” Ungar contended that Roy’s comparisons were based on so-called “teaser rates” on the eHealthInsurance website, explaining, “I mean, you don’t have to be a healthcare policy expert to know that websites like eHealthinsurance.com always flash low rates in front of you — prices that maybe one person in a thousand might actually hope to achieve — to tickle the interest of a potential customer.” Where did Ungar gain that urban mythology? One person in a thousand? Seriously?

Ungar elaborated, “It’s not that the flashing low prices are necessarily false as there is always going to be someone who can qualify for the exceptionally low rate.” But “have you ever suffered a migraine headache? If you have, be prepared for a substantial increase over the teaser price stated on a website like eHealthinsurance.com. Ever experience a summer of hay fever? Your rate will skyrocket as a result. Did you have acne as a teenager? Uh-oh…price is going up.”

But this is just more fabricated urban mythology. What is Ungar’s source that insurance rates “skyrocket” for “a summer of hay fever,” or teenage acne? There is none. Ungar is in competition now with Aesop, and the Brothers Grimm.

Even neo-Marxist propagandist Ezra Klein of the Washington Post (folks, labeling Klein a “neo-Marxist,” is not gratuitous; I grew up with these sorts of folks in the Ivy League, and revealing Krugman, Klein, the New York Times and the Washington Post for what they are is a public service) corrected Ungar in a back-handed way, but then went on to argue fallaciously that the real data is not relevant.

Klein finds a “bestseller” policy on eHealthInsurance.com offered in his hometown of Irvine, California for $109 a month. At first he echoes Ungar with further silly fabrications, arguing that rate is dependent on such questions as whether you have ever had a headache, “Do you feel sad when it rains? When it doesn’t rain? Is there a history of cardiovascular disease in your family? Have you ever known anyone who had the flu?”

But then Klein reveals the truth, saying, “According to HealthCare.gov, 14 percent of people who try to buy that plan are turned away outright. Another 12 percent are told they have to pay more than $109.” But what that means is that three-fourths of people get the health insurance for the $109 quoted!!!!!

Three-fourths is 75%. Rick Ungar’s “one person in a thousand” is 0.1%. That is about as accurate as Ungar usually gets, in the cause of left-liberalism.

Baby Talk At least having got the basic facts right, Klein goes on to advance another fallacy, reflecting a poor education. Klein goes on to argue that it is okay that Obamacare health insurance costs more, because Obamacare is better health insurance, at least for the 14 percent who are turned down for the $109 policy because they waited until they were already sick and costly to start to buy health insurance.

You see, Obamacare health insurance has something called “guaranteed issue,” which means that health insurers must cover anyone who shows up to apply for their health insurance, no matter how sick and costly they are when they first show up. That is like requiring fire insurers to provide fire insurance for people whose homes are already on fire, or requiring car insurers to provide insurance for people whose cars have already been in crashes.

And Obamacare health insurance has something called “community rating,” which means health insurers can’t charge any more for applicants who already have cancer or heart disease when they first apply. That is like telling fire insurers that they can’t charge any more for applicants with houses already on fire, or car insurers that they can’t charge any more for applicants with wrecked cars.

Klein is arguing that Obamacare is better health insurance because it has guaranteed issue and community rating, so of course it costs more. But that is like saying that you are better off if the government forces you to buy a Cadillac instead of a Chevy even if you have to pay the higher price of the Cadillac. Of course, those features of the Obamacare health insurance do nothing to help the 75% who can get the $109 health insurance policy, or even those of the 12% who can still get it for less than double that price.

But there is an even more fundamental problem with Klein’s thinking. Only the consumer can say whether the extra costs of the Cadillac are worth it to him, not some third party, elitist, busybody like Klein. Klein’s thinking reflects an uneducated notion of economics. Roy accurately captured Klein’s position in his next column on the issue, headlined, “Democrats’ New Argument: It’s A Good Thing That Obamacare Doubles Individual Health Insurance Premiums.”

Roy explained Klein in saying, “What’s new is that liberal columnists, facing reality, are conceding that premiums will go up for most people in the individual market. But they’re justifying it by saying that ‘rate shock’ will help a tiny minority of people who can’t get insurance today. If they had said that in 2009, would Obamacare have passed?” Roy contends it would only benefit a tiny minority because, “Based on enrollment in Obamacare’s high-risk pool program, the number of people in America who are truly uninsurable is closer to 150,000. That’s a pretty small number in a nation of 300 million.”

Roy added further:

The key thing to remember is that back when Obamacare was being debated in Congress, Democrats claimed that it was right-wing nonsense that premiums would go up under Obamacare. “What we know for sure,” Obamacare architect Jonathon Gruber told Ezra Klein in 2009, “is that [the bill] will lower the cost of buying non-group health insurance.’ For sure.

In 2009, was Ezra saying that its ok that premiums will double for the average person, because a minority of people with pre-existing conditions will benefit? No.

The Obamacare Chaos Spreads Now the data from Ohio is showing the same thing, Obamacare is causing individual health insurance premiums for next year to double. As Investor’s Business Daily reported on June 11, “Late last week, Ohio’s Department of Insurance revealed that thanks to Obamacare, the average premium in that state’s individual market will be 88% higher next year, and there won’t be as many offerings.”

In Oregon, “When Hoover Institution senior fellow Daniel Kessler compared Kaiser Permanente rates for similar insurance plans available to a 25-year-old male, he found a premium spike of 78% next year,” IBD added. For Rhode Island, “”Blue Cross says a 28-year-old male…who makes $34,000 will see premiums more than double to $244 a month next year.”

Yet, Obama says, “This is the way that the law was designed to work,” and “this is working the way it’s supposed to.” Of course it is. As Obama said himself in California, Obamacare provides “benefits like free preventive care, checkups, flu shots, mammograms, and contraception” and “protections like allowing people up to the age of 26 to stay on their parents’ health care plans.” All those free benefits cost money, not to mention the guaranteed issue and community rating.

Then there are all those Obamacare taxes that further add to the cost of health insurance. Like the $100 billion a year tax on health insurance that will be paid by consumers, and new taxes on medical devices and other fees that consumers will end up paying for. That will raise the cost of health insurance too, as anyone with a brain should have known.

So good morning, sucker. Obama barnstormed the country telling us Obamacare would “bend down the cost curve” and save families $2,500 a year. And now when it turns out to be doubling health insurance premiums, he tells us that is what he intended all along.

Is not all this dishonest double talk an even more concrete abuse of the American people than the NSA eavesdropping?

[First Published on The American Spectator]

Peter Ferrara

Peter Ferrara is senior fellow for entitlement and budget policy at The Heartland Institute, a... (read full bio)