To President Obama’s now-infamous promise that Obamacare “will lower premiums” for health insurance can now be added this whopper from Gary Cohen, described by the Wall Street Journal as “a top regulator” at the Department of Health and Human Services: “The prices are affordable.” Judging by the schedule of health insurance premium prices made public this week by the Obama administration for coverage offered on government-run exchanges in 36 states, Cohen certainly has an odd idea of affordability.
Based on the example of a 27-year-old male nonsmoker living in Nashville, Tenn., who presently can get a bare-bones policy for $41 a month, the Journal said the equivalent coverage under Obamacare will cost $114 a month. That’s a 178 percent increase. Obamacare defenders will say that’s an apples-and-oranges comparison since the government mandates benefits that aren’t presently included in a bare-bones policy. That’s true, but it doesn’t change the fact that the young consumer is being forced to pay 178 percent more to buy a product he may not want or need.
The more likely outcome is millions of similarly situated young consumers will opt to have no coverage because the premium increases in other cities across the country will be comparable or, in many cases, much steeper. In Miami, the same 27-year-old now paying $66 per month will pay $163, a 147 percent increase. The figures for other major cities include Chicago (69 percent), Atlanta (286 percent), New Orleans (336 percent), Houston (119 percent), Philadelphia (167 percent) and Omaha (523 percent).
And don’t forget that to keep down costs while meeting Obamacare’s regulatory requirements, many insurance companies have opted to strip down the provider networks of the policies they are offering on the exchanges, meaning fewer choices of doctors and hospitals.
When those millions of young people opt out, rates will have to be increased for everyone else. This is because, as the Washington Examiner's Philip Klein has conclusively demonstrated, Obamacare absolutely depends for its success upon the infusion of revenue from healthy young policyholders to subsidize coverage for older people who will cost far more to insure.
Spinning fables about the cost of Obamacare premiums apparently is the irresistible temptation for the Obama administration because, as the Manhattan Institute's Avik Roy points out, the official announcement from HHS of the 36-state premium rates included the claim that “premiums nationwide will also be around 16 percent lower than originally expected.” That statement is an artful misrepresentation created by comparing the new rates to Congressional Budget Office projections of what rates might be in 2016.
Roy quotes former CBO chief Douglas Holtz-Eakin saying of the HHS claim, “There are literally no comparisons to current rates. That is, HHS has chosen to dodge the question of whose rates are going up, and how much. Instead they try to distract with a comparison to a hypothetical number that has nothing to do with the actual experience of real people.” A lot of folks are going to wish Sen. Ted Cruz had kept on speaking.