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ACA Supporters Spin Obamacare Disaster into Good News by Cooking the Books


The dominos keep falling on the California ACA story. Last week the state released official estimates about the cost of premiums under Obamacare, and the law’s supporters were jubilant.

One the one hand, wonks like Matt Yglesias and Ezra Klein were happy that the estimates came in lower—in some cases, much lower—than the rates originally predicted by the Congressional Budget Office when the law was passing through Congress. On the other hand, California itself claimed that the new rates were equal to or cheaper than the rates Californians currently paid.

The law’s wonky supporters quickly qualified their excitement by noting that results might not be replicable in other states. Moreover, significant tradeoffs had to be made to keep prices down.

But now a new wrinkle has been added to the story. Upon closer examination, health care scholar Avik Roy noticed that the comparison used by the state to say that the new rates would save consumers money was spurious. Rather than comparing individual plans to individual plans, the state was comparing individual plans to small business plans. And lo and behold, when you compare like plans to like plans, the numbers look much worse. Roy breaks them down in Forbes:

If you’re a 25 year old male non-smoker, buying insurance for yourself, the cheapest plan on Obamacare’s exchanges is the catastrophic plan, which costs an average of $184 a month. (By “average,” I mean the median monthly premium across California’s 19 insurance rating regions.)

The next cheapest plan, the “bronze” comprehensive plan, costs $205 a month. But in 2013, on (NASDAQ:EHTH), the median cost of the five cheapest plans was only $92.

In other words, for the typical 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.

The positive reactions to the California news, then, have been based on unhelpful or misleading comparisons. The question people care about is a simple one: How much is this going to cost me? Can I get the same coverage I have now for less money under the new plan? Astonishingly, years after the law passed, and after hordes of federal and state bureaucrats have toiled for months on figuring out how things work, not even the ACA’s backers are able to give confident answers to core questions like these.

Meanwhile, Joe Citizen is still waiting in California to find exactly how much he will have to pay for the same level of coverage once the exchanges go into effect. And it increasingly looks like, even in California, many citizens, and especially young men, are going to be paying more in premiums for services they didn’t think they needed in the first place. Ripping off young people to subsidize higher income middle aged people isn’t a side effect of Obamacare; it is the central design feature that makes the system work, and once the spin comes off the California numbers, the ugly reality of this misbegotten “reform” cannot be disguised.

That said, the world won’t end with Obamacare. It’s not the worst policy ever created. The pre-2010 system was seriously flawed and driving the country towards bankruptcy, and Republicans who hate Obamacare should ask themselves what the GOP majority in the Senate and the House did about health care between 2001 and 2007. Both parties share the blame for this mess; Republican immobility enabled bad Democratic policy.

Some Democrats know that Obamacare is a mess and hope that it drives the country toward single payer, UK-style health insurance. We’re hoping that the pain and mess of Obamacare will reduce public confidence in the ability of wonks to micromanage something as complex as the American health care system, and will encourage reforms that can harness the power of technological progress, enlightened consumer self interest, and economic competition to make American health care better, cheaper and more user-friendly from year to year to year.

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  • nonotford

    No mention that Roy worked on Romney’s campaign?

  • Corlyss

    “ACA Supporters Spin Obamacare Disaster into Good News by Cooking the Books”
    Dems will do this long before they will even face the truth, never mind admit the truth to the electorate.

  • Fred

    ACA will be no problem for the Democrats. Their two main constituencies are the poor who will receive from rather than pay for Obamacare and the bi-coastal wealthy elite who can afford decent private health insurance. As usual, it is the middle class that will suffer.

  • Jim__L

    “Republicans who hate Obamacare should ask themselves what the GOP
    majority in the Senate and the House did about health care between 2001
    and 2007. Both parties share the blame for this mess; Republican
    immobility enabled bad Democratic policy.”

    Nothing? Are you joking? They passed Medicare Part D!

    The problem with Republican policy from 2001 to 2007 was it too closely resembled the Democrats’ policy, in an attempt to “own” the health care issue and shovel out money from public treasury by the tens and hundreds of billions!

    If the GOP was culpable for the financial disaster that is our health care system, especially the unfunded senior healthcare monstrosity, it’s in aping the Eurosocialist snake oil the Democrats are hawking.

  • ljgude

    For foreigners visiting the US travel Insurance costs twice as much as it does to travel to other countries because medical treatment in the US costs twice as much as it does anywhere else. Health outcomes are similar to other advanced nations, it’s the money that is totally messed up, not the medicine. I think that the things Professor Meade puts his hopes on will help – technology, competition etc. But 8 to 9% of US GDP is a lot of money and it wont be easy to pry those snouts out of the trough. Yessiree, Them’s powerful hawgs with congressional connections, ladies and gentlemen! I see a few ways to go here. Keep feeding ‘en until the system collapses, put the tea party in power to shoot the hawgs, or figure out a way to disintermediate as much of current healthcare as possible and put it out of business.That last one is a tricky proposition but could be done along the lines of the Portland MDs mentioned here recently that cut out the insurance companies. Or outsource where possible to places like India or better yet hospitals close by in central America who will provide treatment at a competitive cost. its a start.

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