Lies

08.17.14

The Five Biggest Lies About Obamacare

Despite its continued unpopularity, the Affordable Care Act has been a success, and conservative predictions of ‘death spirals’ and huge premium spikes just haven’t come true.

Looked at one way, it’s been another rocky summer for Obamacare. First, the Halbig v. Burwell decision by D.C. Circuit Court of Appeals, in which two conservative judges used an error in the act’s language to leap to the ludicrous conclusion that a law passed for the very purpose of helping all Americans get health insurance was in fact intended to allow only certain Americans to do so, was a potential body blow. The full D.C. Circuit is widely expected to reverse the two conservative judges en banc sometime this fall, but it could still wind up at the Supreme Court, and with this Supreme Court, you just never know.

Second, the law isn’t getting any more popular. It’s true that some polls, which ask respondents whether to “keep and fix” the Affordable Care Act or repeal it, generally produce majorities saying the former. But that doesn’t mean people have warmed to it, and in early August, a Kaiser Family Foundation tracking poll  generated some inexplicably bad numbers. The basic favorable-unfavorable rating was 37 to 53 percent. That 53 percent represented a staggering eight-point negative spike since June.

The spike is odd and vexing, since the news of actual substance since June has mostly been very positive. Most obviously, there are the several million—somewhere between 6 million and 12 million, depending on which source you believe—more Americans with health insurance. Those who pay closer attention to such things might have noticed developments like one that happened at the end of July, when the Medicare trustees’ report said that the program’s solvency could extend for an additional four years, to 2030, because of savings achieved through the ACA. But of course, the percentage of Americans who know that is infinitesimal.

So, yes—jury still out and all that. Perceptions remain terrible. But it’s worth stepping back and looking at reality. And the reality is this: On the evidence available to us so far, nearly everything that the more vocal conservative critics have said about the ACA has been wrong. No. “Wrong” implies a statement made in good faith. These charges were often made in the worst possible faith. And they were lies. 

And—here’s a crazy thought—maybe it’s not just dumb luck that the law seems to be working, especially in the states that took the Medicaid money and set up well-run exchanges. Maybe it’s working because bureaucrats (!) anticipated all the potential problems and planned for them in the writing of the law. Nancy-Ann DeParle, one of the administration’s chief architects of Obamacare, put it this way: “When President Obama took office, there were 42 million uninsured Americans, premiums that were unaffordable for families and businesses, a delivery system with the wrong incentives, and unsustainable cost growth. The Affordable Care Act was the product of nearly two decades of bipartisan analysis and discussions among health policy experts and economists to address these problems, and most--indeed, virtually all--of the policies in the law had widespread agreement from these experts.” In other words, writing this law wasn’t guesswork.

Herewith, the five biggest whoppers, with special emphasis on the fifth (and most current one), and how they’re turning out to be so fantastically wrong.

1. Healthy People Won’t Sign Up

Or call this “Death Spiral Part I.” The idea here, spread lustily by many conservatives since 2010 but especially during last fall’s disastrous roll out, was that healthy people simply wouldn’t buy insurance. Senator Orrin Hatch said last November that “at this pace, the Obama administration will never be able to meet their enrollment goals.” Speaker John Boehner at the time groused that “the idea that the federal government should come in and create a one size fits all for the entire country never was going to work.”

Their hope was that only really sick people would sign up, which would lead rates to spike—the much-feared death spiral (more on that later). But lo and behold it turned out that millions of healthy people did want health insurance. As noted above, the precise numbers are hard to come by. But Gallup’s estimate is that the country has roughly 10 million newly insured citizens under Obamacare. And insurance companies report that around 80 to 85 percent of them are paying their premiums (this was another canard spread on the right, that people would sign up but never pay).  

In sum, the law’s advocates were right, and its critics wrong, that health insurance was something normal Americans did in fact want. “There never was any realistic prospect of a death spiral,” says Jon Gruber of MIT, one of the country’s top health-care economists.

2. You Won’t Be Able to Choose/Keep Your Doctor/Plan

It’s true that this happened in a limited number of cases—maybe six or seven million people who bought policies on the individual market got cancellation letters from insurers telling them that their plans didn’t meet the minimum requirements under the new law, as NBC News explosively reported last fall. 

It harmed the administration’s credibility, and rightly so. But it didn’t represent much of a change from the past — the “churn-rate” in the individual market has always been high. More importantly, no one seems to have followed up with this population to try to figure out what percentage did, in fact, lose coverage and/or have to pay considerably more for a new plan, so we don’t actually know how many of those six or seven million walked away satisfied or dissatisfied.

But more broadly, in a country where some 260 million people have health insurance, no one has adduced any proof that the ACA has resulted in anything remotely like the cataclysm opponents predicted. In fact, last fall, Factcheck.org rated such claims as outright falsehoods. And Gruber noted to me that if some people are “losing” their doctors, it’s often by their own choice, because now that they have so many different coverage options, many are choosing less expensive or so-called “limited network” plans. “No one is making people buy these plans,” Gruber says. “They’re cheaper alternatives. This is capitalism at its finest. For the right to criticize that is just ludicrous.”

3. Obamacare Will Explode the Federal Deficit

You heard this one a jillion times back when the law was being debated. Still today, Republicans and conservatives are deft at cherry-picking numbers out of official reports that can convey the misleading impression that fiscal watchdogs think the law will be a disaster.

The truth is that the Congressional Budget Office said in 2010 and reaffirmed this summer that the Affordable Care Act’s budget impact would be positive. The 2010 estimate was that the ACA would cut deficits by $124 billion over its first decade. And in June, CBO head Douglas Elmendorf reported that his experts “have no reason to think that their initial assessment that the ACA would reduce budget deficits was incorrect.”

Now, he throws in a number of caveats, as any bureaucrat should, having to do with the fact that many provisions of the act will kick in later. But Elmendorf sees no hard evidence to suggest that initial estimates were wrong. In fact, says Paul Van de Water of the Center on Budget and Policy Priorities, “The CBO has estimated that the law will especially reduce the deficit in its second decade, and there’s every reason to believe that those estimates are on course.”

4. Okay, Then, It Will Bust States’ Budgets

Texas’ Rick Perry, Florida’s Rick Scott, and numerous other Republican governors have said that Obamacare will bust their budgets. They’re basing that on the fact that the federal government will pay 100 percent of the costs of Medicaid expansion through 2016, but a little less than that thereafter (although never less than 90 percent). So states are going to have to start shelling out (that is, states that take the money in the first place, which Texas and Florida did not).

That’s true as far as it goes. But here’s the part Perry and Scott leave out. All states have, of course, an existing relationship with the Medicaid program in which states pay for some portion of the program’s implementation. And a number of studies estimate that in that pool of funds, states will save significant amounts of money that will offset most of the new expenses incurred under Obamacare. For example, Massachusetts found that after implementation of Romneycare, its costs for “uncompensated care”—charity work, basically—decreased considerably. And one study released in June found that uncompensated care costs are already dropping dramatically under the ACA—but only in the states that have taken the Medicaid money.

Thus, Perry, Scott, et alia are perhaps agents of a self-fulfilling prophecy: Yes, the ACA might bust the budgets of their states—the states trying to kill off Obamacare. But in the states trying to make it work, the budgetary impact, say most nonpartisan experts, will be a little bit negative, but pretty small.

5. Premium Rates Will Shoot Through the Roof

This is the big enchilada, and the culmination of the alleged death spiral. The charge here is that the lack of healthy enrollees will force insurers to jack rates up to the heavens, because they’ll have all these sick and dying people on their hands. Premium hikes for this year were all over the map, because they were based on guesswork by the insurance companies about who was enrolled. But now, the companies have hard data. So just watch, critics say, as the rates go boom.

To be sure, you can go to your Google machine and enter “insurance premium increases 2015” and find a lot of scary headlines from earlier this year. But you can ignore them all, because no one really knows yet.

Here’s how it works. By roughly this past Memorial Day, insurance companies submitted their 2015 rate requests to the states. These could range from tiny to huge—but they’re just requests. State insurance commissioners are now reviewing the requests. Final, approved rates will be made public in November (before November 15, when Obamacare’s second enrollment period begins). By the way, the ACA, for the first time ever, rationalized this “rate season,” so that everything happens in almost every state at the same time and in more or less the same way. Before, there was no national logic to the process at all.

Again, to echo back to what DeParle said: The people writing the law knew all this was coming, and understood very well that rate shock would be a risk. As a result there are numerous provisions in the law designed to guard against it. The most notable one carries an obvious name: “rate review.” Under rate review, any request for an increase of 10 percent or more has to be approved by a board, to which the insurer has to offer copious documentation proving that such a hike is necessary. Prior to the ACA, there was no such review. 

Before we go any further, let’s step back. What’s a typical, pre-ACA rate increase? Good question. In 2008 it was 9.9 percent; 2009, 10.8 percent; 2010, 11.7 percent. Within those broad averages, numbers were all over the map: In 2010, rates went up in Kentucky by just 5.5 percent, but in Nebraska by 21.8 percent.

The numbers released in November will similarly be all over the map. There are just too many variables to say otherwise—how much competition there is among insurers in any given state (in general, it’s increased); what the risk pool looks like in a state (how old, how sick); and other factors. So undoubtedly, there will be some isolated hair-raising increases.

We don’t know, but we do have some early indications and studies, and they are pretty hopeful. The Health Research Institute at PricewaterhouseCoopers looked at rate requests from insurers that have been filed across 29 states and the District of Columbia and found that the average increase is 8.2 percent, which is impressively low and definitely not “sticker shock.” And remember, these are mostly just requests (in Rhode Island and Oregon, the rates are final), which aggressive state insurance commissioners might seek to make still lower.  "So far, the filings suggest modest increases for 2015, well below the double digit hikes many feared,” says Ceci Connolly, the managing director of the institute.

All the above is about the individual market—people buying insurance on their own, either through state exchanges or the federal marketplace. For a host of reasons, that’s the best barometer by which to measure the law’s success. But there are other markets, too, notably the small-business market, where employers with fewer than 50 employees buy for their workers. There has been some grumbling among conservatives that this “small-group” market will take an especially hard hit, but that seems not to be the case either.

Again, there will be great variance in the small-group market, according to Jon Kingsdale, of the Wakely Consulting Group in Boston. He says the biggest impact will be that, because of some technical changes made by the law, employers with older employees and larger families will likely see rates increase, while employers with younger workers and smaller families may see rates decrease.  But overall, says Kingsdale, “I do not believe there will be a significant jump in rate in the small-group market, because the underlying body of people being insured is not so different from the prior year.”

One last point on rates: This is another area where Republican saboteurs of the law can, if they choose to, make it not work. That is, Republican state insurance commissioners can approve big premium hikes just to make the law look bad. Says Sally McCarty, the former Indiana state insurance commissioner, now at the Georgetown Center on Health Insurance Reforms: “States that are in earnest about implementing the law will likely see lower increases, and states not so concerned about seeing the law succeed will see higher increases.”

So there we have it. Yes, it’s too early for firm conclusions. But certainly the preponderance of the evidence so far is that the apocalyptic predictions just aren’t coming true at all. Granted, there’s a lot of other news going on lately, but this is the real reason why Obamacare has kind of dropped out of the news cycle: Republicans aren’t bashing it quite so much anymore, because even they see it’s kind of working.

The damage they’ve already done is considerable. “Health care is a topic that people feel particularly close to as it involves the most important decisions people make; it is also a topic people can feel incredibly anxious about for the same reason,” says Neera Tanden, president of the Center for American Progress and a former administration health-care official. “The right wing has preyed upon those anxieties by manufacturing one lie after another to create a veil of opposition against a bill that has so far been pretty effective at covering people and lowering costs.  It is an indictment of our policy deliberations as a country that these lies have been so effective.” Slowly, the truth is catching up.