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Topics: Obamacare

HHS report on Obamacare premiums lacks relevant comparison

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Beltway Confidential,Philip Klein,Obamacare,Health and Human Services,Analysis

As President Obama made another public case for his signature health care law on Thursday, the Department of Health and Human Services released a report touting the affordability of coverage to be offered on the new insurance exchanges scheduled to open on Oct. 1. But the report relies on a price comparison that isn’t particularly relevant.

“Today’s report shows that the Affordable Care Act is working to increase transparency and competition among health insurance plans and drive premiums down,” Health and Human Services Secretary Kathleen Sebelius said in a statement.  “The reforms in the health care law ensure consumers will have access to better coverage at a lower cost in 2014.”

The report claims that Obamacare “lowers premiums by nearly 20 percent,” but this is misleading. HHS derives the number by comparing proposed 2014 rates on the exchanges in 11 states to a projected national average the Congressional Budget Office came up with last year. But the relevant comparison for consumers is not how the Obamacare premiums compare to a theoretical number, but how they compare to what consumers actually pay in 2013.

A number of studies have shown that Obamacare will significantly increase premiums, especially for young and healthy Americans relative to what they’re paying now. And that’s just for people with insurance. As I’ve noted before, young and healthy Americans choosing to go without insurance effectively pay $0 per month in premiums under the current system. For the law to be successful, the administration has to be able convince enough young and healthy Americans to purchase insurance to offset the costs of covering those who are older and sicker.

 

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