The conservative Heritage Foundation released last week a new report on insurance premiums under Obamacare, and the conclusion was that favorite of conservative talking points: people are going to pay more for insurance under Obamacare.
Only the foundation left out one key variable in the equation, one that undermines their conclusion that “individuals in most states will end up spending more on the exchanges.”
They didn’t account for the financial help that the Affordable Care Act gives uninsured people to purchase insurance, one of the law’s central provisions.
Under Obamacare, the sticker price for insurance isn’t what most people are going to actually pay. The law offers tax credits, on a sliding scale, for people making between 100 and 400 percent of the federal poverty level. According to estimates from the Kaiser Family Foundation, more than half of uninsured Americans have an income within that range.
Another 38 percent fall below the poverty line. They are supposed to be eligible for Medicaid under the law, and millions in poverty will be covered that way. However, more than 20 Republican states — with an assist from the U.S. Supreme Court — have refused to expand Medicaid coverage to them. So people in those states are admittedly out of luck, but that wasn’t the ACA’s intention.
That leaves only 10 percent of uninsured Americans who make above 400 percent of the poverty level and, as the law was conceived, would be paying the premiums that Heritage highlights in its analysis.
And that’s a fatal flaw, Sara Collins, a health economist at the Commonwealth Fund, which is generally favorable toward Obamacare, told TPM. One of the big goals of the ACA was making coverage purchased through the individual market, where prices have historically been higher, more affordable. The primary way that the law achieves that is through the tax credits.
“That’s really been the major reason why people have faced high costs in this market,” Collins said. “The tax credits are a way of leveling up the playing field. People can buy a plan in that they can’t right now.”
In other words, it seems disingenuous to say people will pay more — as the first line of Heritage’s conclusion does — if you don’t calculate what they’ll actually pay. Some, young adults in particular, could end up paying more. But the Heritage analysis doesn’t tell the whole story.
Here’s what the study’s author, Drew Gonshorowski, said in an email when TPM asked why he had not accounted for the premium tax credits.
“I wanted this research to really focus on how the insurers are pricing and responding to the completely new environment,” he wrote. “I really wanted to provide a contribution to the discussion that is lacking when you look at releases from the Health And Human Services, which is a real attempt to compare plans to the past.”
He added that the foundation was conducting more research to figure out how subsidies would affect the premium-cost landscape. When asked if the conclusion about individuals spending more was an overstatement, Gonshorowski didn’t respond.
Collins had some other questions about Heritage’s baseline numbers — which, to be clear, did show an increase in premiums in most states for most people (though there were some exceptions).
They’re some of the same concerns that have been raised repeatedly when analysts want to figure out how Obamacare is affecting premiums. Starting in 2014, the ACA prevents insurers from discriminating against people with preexisting conditions, charging women more than men and jacking up premiums for older, sicker enrollees. It also establishes a baseline set of benefits that must be offered. That’s a significant change in both the pricing model for insurers and the products being sold, compared to 2013.
“It’s really difficult to make an apples-to-apples comparison from 2013 to 2014 because the rating rules are changing completely and the benefits packages are totally different,” Collins said. “Does the 2013 premium reflect somebody’s who’s really healthy, a benefits package that’s not comprehensive and a plan with an extremely high deductible?”
All of the above questions, though, didn’t stop conservatives from touting Heritage’s findings. It was splashed on websites like TownHall and Sen. Ted Cruz (R-TX) posted it on his Facebook page.