The truth can be slippery when it doesn’t suit your agenda. The White House spin machine is in high gear when it comes to ObamaCare rate increases.
I’ve been discussing the ominous news lately about rising healthcare premiums and deductibles that is sure to continue in the future (UnitedHealth Exit Foreshadows Dark Future) but if you listen to the Obama administration you’ll get an entirely different impression.
According to the most recent report from the Department of Health and Human Services (HHS), the average 2015 ObamaCare exchange premium increased by only 8 percent in 2016. Bob Laszewski, insurance industry analyst, tells us that is technically accurate – but entirely disingenuous.
The old saying is that “figures don’t lie but you can lie with figures” and this is certainly a good example of that truism. Here is the statement from HHS:
“Two thirds (67%) of HealthCare.gov consumers selected a new plan in 2016; all new consumers plus 43% of returning customers. Taking into account shopping, the increase in the average premium was 8% between 2015 and 2016.”
Laszewski helps us understand the deception in this statement. He says there is a catch not mentioned by HHS: The administration mentions nothing about what kinds of health plans these 43% of returning consumers gave up to lower their increases.!
He gives us an example: Let’s take a consumer who had a 2015 Silver Plan with a $2000 deductible that was going to increase in cost by 20% for 2016. Therefore this consumer moved to a much cheaper 2016 Silver plan with only a 5% premium increase but with a higher deductible of $3000. Instead of the 20% premium increase he now has only a 5% increase. But his out-of-pocket expense has gone up by a 5% premium increase plus a $1000 deductible increase. However, the HHS doesn’t report the deductible increase; only the 5% premium increase.
Rate increases come in three forms:
- Higher premiums
- Narrower networks – fewer choices of doctors and hospitals
- Higher out-of-pocket costs
In order to avoid higher premiums, consumers must accept one or both of the other forms of rate increases. But HHS doesn’t mention that in its report because that is an “inconvenient truth.”
A Second Spin
HHS also goes on to make another technically correct but disingenuous statement that the average rate increase was only 4% when government subsidies that cap exchange participants’ premiums are taken into account. Laszewski again points out the deception for two reasons:
- The quality of the plans chosen – The report says nothing about the narrow networks and out-of-pocket expense increases these people had to accept to get lower premiums.
- Eleven million people don’t get government subsidies – That 4% number only applies to the 85% of people buying their ObamaCare insurance on the exchanges. That still leaves 15% (about two million) without subsidies on the exchanges and another nine million in the individual insurance market purchasing their insurance off the exchanges and without subsidies.
Lastly, there is the unmentioned issue of those who dropped their coverage in 2016 because the prices were just too high. The HHS report says that 9.6 million people bought health insurance on the federal exchanges in 2015. The report also says that 4 million were new indicating 5.6 million were holdover customers from 2015. But in their December 31 “Snap Shot” report, the administration said there were 6.3 million enrolled on the federal exchanges on that day. That leaves about 700,000 unaccounted for that apparently did not renew on the federal exchanges when the rates went up.
Why all this spin? Laszewski says, “The administration is scared stiff the 2017 rate increases, about to be made public, will be even worse than last year. When we start hearing about the big increases the administration will just roll this report out once again and make the point that the latest 10% or 20% or 30% rate increases being reported really aren’t 10% or 20% or 30% rate increases – after all those 2016 rate increases that were supposed to be so huge only averaged 8%!”