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A rash of sensational, context-free reporting is needlessly alarming the public about what’s happening in America’s health insurance markets as a result of Obamacare. Making matters worse, it’s set against a backdrop of relentless, intentional misinformation from the law’s opponents. It should come as no surprise that many Americans are anxious about a law most know little about other than what they catch on short TV news segments.
Erik Wemple, media critic for the Washington Post, noted that a Florida woman named Wanda Barrette, who claimed that her insurance premiums were increasing ten-fold – from $54 per month to $591 — was interviewed by CBS and three different Fox TV shows (many conservative outlets like The Weekly Standard also picked up the CBS report). Wemple interviewed the woman himself and found that the story didn’t convey that she was losing “a pray-that-you-don’t-really-get-sick ‘plan.'”
Her current health insurance plan, she says, doesn’t cover “extended hospital stays; it’s not designed for that,” says Barrette. Well, does it cover any hospitalization? “Outpatient only,” responds Barrette. Nor does it cover ambulance service and some prenatal care. On the other hand, says Barrette, it does cover “most of my generic drugs that I need” and there’s a $50 co-pay for doctors’ appointments. “It’s all I could afford right now,” says Barrette.
When asked if she ever required hospitalization, Barrette says she did. It happened when she was employed by Raytheon, which provided “excellent benefits.” Ever since she left the company and started working as an independent contractor, “I haven’t been hospitalized since then, thank God.”
It was good reporting. But even Wemple only mentioned in passing that the woman “may be eligible for subsidies.” In doing so, he buried the lede — according to Kaiser’s subsidy calculator, and presuming Barrette doesn’t smoke, she would be eligible for a bronze plan, which guarantees free preventive care and coverage for hospitalizations, for only $97 per month — one-sixth of that headline number that’s making the rounds (a silver plan, with more extensive coverage, would cost her $209 after subsidies).
That story was far from alone in hyping a “trainwreck” narrative without giving equal time to the law’s benefits. Front-and-center today is an NBC “investigation” that’s been getting an enormous amount of attention, especially in conservative circles. It supposedly reveals that the Obama administration knew in advance that millions of insurance plans would be cancelled even as the president repeatedly promised Americans, “if you like your healthcare plan, you will be able to keep your healthcare plan.”
But this purported ‘smoking gun’ only tells us the obvious: that the administration, like every health care expert in the world, knew that within the individual market there were insurance plans that don’t meet minimal standards of coverage – plans that would likely leave their purchasers bankrupt should an accident or serious illness befall them. (Perhaps Obama should have said, “if you have a plan that isn’t a ripoff and doesn’t leave you entirely exposed to risk, you can keep it.”)
And it should come as no surprise that some people will have to pay more for better coverage, but that, too, is a story that requires considerable context that’s been lacking in a lot of recent reporting.
Here’s an excerpt from NBC’s report:
Four sources deeply involved in the Affordable Care Act tell NBC NEWS that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”
And here’s some of what’s missing from this report and many others like it…
Jonathan Cohn of The New Republic points out that there will, indeed, be some people who lose coverage, and some will have to pay higher rates, but many others are going to experience “rate joy” – a story that’s been getting far less attention…
Obamacare is transforming one part of the existing health insurance market, in ways that will force some people to pay more than they do now. But that’s only part of the story. Many other people, quite possibly the majority of people in that market, will pay less than they do now. And even those paying more will be getting more comprehensive, more secure insurance.
Read the whole piece – it’s a good primer on everything that’s happening to our insurance markets as a result of Obamacare.
Kevin Drum at Mother Jones argues that the universe of people who will be adversely affected by cancellations is probably pretty small…
[These stories don’t] describe a huge demographic—people who are just barely above the subsidy threshold and currently have individual coverage and are young enough to see premium increases—but there’s no question they exist…
It’s not clear how many people are genuinely going to get hit by sticker shock. In most of the stories I’ve read… people are simply taking the word of their insurance company about how much a new policy will cost. They may find out that things are better once they actually shop around and check out the subsidies they qualify for. Others may find that the higher premiums pay for themselves in lower out-of-pocket expenses throughout the year…
Right now, even in places like California that have working exchange sites, a lot of people are still guessing about how Obamacare will actually affect them…. Better benefits and federal subsidies are going to have a big impact, and that impact probably won’t be clear until Obamacare has actually been up and running for a while.
As for the “rate shock” some will experience, Josh Barro offered some much-needed perspective at Business Insider…
Once Obamacare is implemented, America’s health insurance system will be a thicket of subsidies and transfers that benefit some people and harm others….
But here’s the thing: Before Obamacare, our health insurance system was already a thicket of subsidies and transfers. The law doesn’t simplify the system, but it does make the thicket of subsidies and transfers more sensible: directed more at people who have low incomes or high health needs, and greatly shrinking the share of the population that doesn’t have health coverage at all. Making the thicket more sensible will mean that some people’s costs go up, producing “rate shock”…
The Los Angeles Times looked at how many Californians who currently get health insurance through the individual market are facing higher premiums. But here’s the most important part of the article:
A number of factors are driving up rates. In a report this year, consultants hired by the state said the influx of sicker patients as a result of guaranteed coverage was the biggest single reason for higher premiums. Bob Cosway, a principal and consulting actuary at Milliman Inc. in San Diego, estimated that the average individual premium in 2014 will rise 27% because of that difference alone.
It’s a lot cheaper to provide health insurance coverage if you exclude a lot of the people who need it most. Making insurance available to people with pre-existing health conditions costs money. Obamacare funds this transfer to the chronically ill in part by raising premiums on healthy people.
And Igor Volsky, a policy analyst at the Center for American Progress, notes that people in the individual insurance market were seeing their plans changed frequently prior to the existence of Obamacare…
The cancellations are a result of so-called grandfather rules promulgated by President Obama’s Health and Human Services. The rule exempts health insurance plans in existence before March 23, 2010 — the day the Affordable Care Act became law — from many of the new regulations, benefits standards and consumer protections that new plans now have to abide by, but says that policies could lose their designation if they make major changes…
The naturally high turnover rate associated with the individual market means that it’s highly unlikely that individuals would still be enrolled in plans from 2010 in 2014. In fact, the Obama administration publicly admitted this when it issued the regulations in 2010, leading Republicans like Sen. Mike Enzi (R-WY) to seize on the story in order to push for repeal of the grandfather regulations.
In the end, lazy stories of “sticker shock” and cancellations by reporters uninterested in the details of public policy only offer the sensational half of a complicated story, and that’s providing a big assist to opponents of the law. As Greg Sargent noted in The Washington Post after the government shutdown proved disastrous for their cause, Republicans “are now hoping to put that behind them by launching a series of coordinated, seemingly serious House investigations into what has gone wrong with Obamacare.” In the House, they’re introducing the ‘Keep Your Health Plan Act,’ which would guarantee that insurers could continue to rip off consumers.
And CBS, after breathlessly offering the meaningless factoid that three times as many people are receiving cancellation notices than have signed up for Obamacare so far (never mind that a grand total of 123 people signed up for “Romneycare” during its first month in Massachusetts), tells us that “the White House is on the defensive trying to explain it.” They could use a little help from a responsible Fourth Estate.
