ObamaCare Bait and Switch
Liberals have spent years claiming that “rate shock” under the Affordable Care Act—the 20% to 30% average spike in insurance premiums that every independent analyst projects—is merely the political imagination of Republicans and the insurance industry. So they immediately claimed victory when California reported last month that the plans that will be available on the state’s new insurance exchange next year would be cheaper than they are today.
Except now it emerges that California goosed the data to make it appear as if ObamaCare won’t send costs aloft as the law’s regulations and mandates kick in. It will, by a lot. And now liberals have suddenly switched to arguing that, sure, insurance will be more expensive but the new costs are justified. Needless to say that was not how Democrats sold health-care reform.
California reported that the rates would range from 2% above to 29% below the current market. “This is a home run for consumers in every region of California,” said Peter Lee, the director of the state exchange. “These rates are way below the worst-case gloom-and-doom scenarios we have heard.”
But Mr. Lee and his fellow regulators were making a false comparison. They weren’t looking at California’s lightly regulated individual insurance market that functions surprisingly well. They were comparing ObamaCare insurance to the state’s current small-business market where regulations similar to ObamaCare have already been imposed.
In other words, California wasn’t comparing apples to apples. It wasn’t even comparing apples to oranges. It was comparing apples to ostriches. The conservative analyst Avik Roy consulted current rates on the eHealthInsurance website and discovered that the cheapest ObamaCare plan for a typical 25-year-old man is roughly 64% to 117% more expensive than the five cheapest policies sold today. For a 40 year old, it’s 73% to 146%. Stanford economist Dan Kessler adds his observations nearby.
We wouldn’t be shocked if California deliberately abused statistics in the hopes that no one would notice that in some cases premiums would more than double. In any case, the turn among the liberals who touted the fake results has been educational.
They now concede that individual costs will rise but claim that it is unfair to compare today’s market to ObamaCare because ObamaCare mandates much richer benefits. Another liberal rationalization is that the cost-increasing regulations are meant to help people with pre-existing conditions, so they’re worth it.
So they’re finally admitting what some us predicted from the start, but that’s also the policy point. Americans are being forced to buy more expensive coverage than what they willingly buy today. Liberals also argue that some of the new costs will be offset by subsidies, which is great news unless you happen to be a taxpayer or aren’t eligible for ObamaCare dollars and wake up to find your current coverage is illegal.
The Affordable Care Act was sold as a tool to lower health costs. In case you missed it, the claim is right there in the law’s title. The new Democratic position is that the entitlement will do the opposite but never mind, which is at least more honest.
But we wonder how long this new candor will last. If the public reacts badly to these higher premiums, the authors of ObamaCare will soon be back to blaming insurance companies and Republicans.
Wall Street Journal
June 4, 2013