Obama’s Broken Promise on Premiums

One of the many promises President Obama made in promoting his new healthcare legislation went like this:

“We’ll lower premiums by up to $2500 for a typical family per year. . . We’ll do it by the end of my first term as president of the United States.”

Everyone knows that didn’t happen by the end of his first term in office in 2012. The Washington Post fact checker, Glenn Kessler, honestly awarded the 2012 claim Three Pinocchios – significant factual error and/or obvious contradictions.

But recently he took up this same issue in a speech marking the one-year anniversary of the opening of enrollment for ObamaCare. At Northwestern University, on October 2, 2014, the president once again was making claims about his healthcare law.

“If we hadn’t taken this on, and premiums had kept growing at the rate they did in the last decade, the average premium for family coverage today would be $1,800 higher than they are.  Now, most people don’t notice it, but that’s $1,800 you don’t have to pay out of your pocket or see vanish from your paycheck.  That’s like a $1,800 tax cut. . . .  And because the insurance marketplaces we created encourage insurers to compete for your business, in many of cities they’ve announced that next year’s premiums — well, something important is happening here — next year’s premiums are actually falling in some of these markets.  One expert said this is “defying the law of physics.”  But we’re getting it done.  And it is progress we can be proud of.”

Update on Premium Increases

The Society of Actuaries estimated in 2013 that the ACA would result in increasing claims costs by an average of 32 percent nationally by 2017. Numerous studies showed there had been double-digit increases in premiums when comparing actual Exchange premiums to previously-prevailing premiums in the non-group market. But such projections were dismissed by proponents of ObamaCare since actual premiums in the Exchanges had not yet been announced.

But now comes a new study from the non-partisan National Bureau of Economic Research, published by The Brookings Institution that overcomes the limitations of these prior studies by examining what happened to premiums in the entire non-group market.

Chris Conover, writing for Forbes, explains:

“In 2014, premiums in the non-group market grew by 24.4% compared to what they would have been without ObamaCare. Of equal importance, this careful state-by-state assessment showed that premiums rose in all but 6 states (including Washington, D.C.).”

Unlike virtually all other studies that have been conducted to date, this new study examined premium data from both exchange and non-Exchange plans, providing a picture of the complete non-group market rather than one segment. This is crucially important since in nearly one-third of states (16), Exchange coverage constitutes 40% or less of the entire non-group market.

Critics have dismissed other studies by saying premiums in the non-group market have always gone up by a large amount, thereby exempting ObamaCare from responsibility for the increases. But this study isolates the causal impact of ObamaCare by using trend data in each state to figure out what non-group premiums in 2014 would have been in the absence of ObamaCare.

All of the percentage changes shown in the chart below represent the net change attributable to ObamaCare after accounting for all the other factors that would have made premiums go up. The adverse impact of ObamaCare on non-group premiums varies considerably from state to state. But the law is estimated to result in lower premiums in only 6 states. Data is incomplete, however, in two states – California and New Jersey – due to anomalous data reporting requirements. Therefore, the large estimated decline of premiums in New Jersey may be inaccurate.

Premium increases by state


Note that premium increases exceed 35% in 9 states, including Oklahoma, Florida, Georgia, West Virginia, Texas, Alabama, Arkansas, New Mexico, and Montana. Conover stresses these increases are above and beyond normal premium trends. No one can credibly claim that these massive premium increases would have happened anyway since the study was specifically designed to isolate the law’s impacts from all the other factors that have driven up premiums in recent years.

While many of these individuals may be eligible for subsidies on the Exchanges, those ineligible for subsidies will never see their premiums go down as promised by President Obama. Conover estimates that 6.2 million in the non-group market had to absorb these premium increases without the benefit of any help from the federal government.

Conover summarizes the findings of this new study:

“In short, it is harder and harder for champions of ObamaCare to ignore the plain truth that this misguided law has increased premiums in the non-group market, a burden borne by millions who have to buy coverage in that market without the benefit of taxpayer subsidies and by the taxpayers who must bankroll subsidies for those who qualify. . . . The many millions in the non-group market who are having to pay higher premiums due to ObamaCare are just one slice of a much larger pool of losers. But until this increasingly incontestable reality is acknowledged by the law’s supporters there is no prospect of changing a law that continues to be opposed by the majority of Americans.”


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