Posted on June 25, 2015
Reaction to the Supreme Court’s ruling in the latest challenge to the Affordable Care Act was swift — and included comments that strayed from the facts. President Barack Obama’s praise of the law and Republicans’ criticism of it went too far in several instances:
• Obama said that the ACA made health care “a right for all,” but as Sen. Bernie Sanders pointed out, the law doesn’t achieve universal coverage.
• Several Republican presidential candidates claimed the ACA was driving up health care costs, when those costs have been rising at low rates in recent years.
• The president said families with insurance through work are paying an average of $1,800 less than they would have been “if we hadn’t done anything.” But his own economic advisers say the difference in premium growth is only partly attributable to the ACA.
• A day before the ruling, Sen. Ted Cruz said that premiums have gone “through the roof,” citing a $3,000 increase in family employer plans since the health care law was enacted. The figure is correct, but premium growth has been slower since the ACA was enacted
• Former Texas Gov. Rick Perry claimed that “nearly 5 million people los[t] their health plans.” That’s based on a high-end estimate by the Associated Press of those whose specific individual market plans were cancelled. But we found the analysis appeared to be inflated, and another analysis put the total at roughly 2.6 million.
• Former Govs. Jeb Bush and Mike Huckabee criticized the cost of the law, but failed to mention that the nonpartisan Congressional Budget Office says it will actually reduce the deficits on net over the next 10 years.
• Obama said the tax credits in the ACA “have given about 8 in 10 people who buy insurance on the new marketplaces the choice of a health care plan that costs less than $100 a month.” They have “the choice” of such a plan, but we don’t know how many are actually paying that amount.
The Supreme Court ruled 6-3 on June 25 in favor of the administration in the King v. Burwell case, which challenged whether federal subsidies could be given to those in states using the federal insurance marketplaces. Language in the Affordable Care Act said that subsidies would be available for those enrolled in an exchange “established by the State,” but 34 states chose to use federally run marketplaces, rather than set up their own. The court ruled that Congress had intended that subsidies would be available nationwide.
Obama began his remarks on the ruling in the White House Rose Garden by saying that when the ACA was enacted five years ago, “we finally declared that in America, health care is not a privilege for a few, but a right for all.” Not exactly. The law was never expected to achieve universal coverage for all Americans.
Democratic Sen. Bernie Sanders, a presidential candidate, basically got it right when he said in his post-ruling remarks that the United States, unlike the other major countries in the world, “doesn’t guarantee health care to all.” (It depends on what one considers “major” countries. But of the 11 countries examined by the Commonwealth Fund in 2014, the U.S. was the only one without a universal system, and the U.S. lagged behind all of the 30-some countries listed in a 2013 report by the organization for Economic Co-operation and Development in terms of insurance coverage for a “core set of services.”)
While the Affordable Care Act has lowered the number of the uninsured in the United States, it hasn’t covered everyone. Nor was it ever expected to.
The White House estimates that 16 million uninsured have gained coverage under the law. The nonpartisan Congressional Budget Office projected there would be 17 million fewer uninsured this year than there would have been without the law. But that would still leave an estimated 35 million uninsured this year. CBO estimates that in 2025, there will be 27 million uninsured.
CBO expects the percentage of insured non-elderly Americans, excluding those in the country illegally, to be 93 percent as early as 2018. But that’s not making health care “a right for all,” as the president said.
Health Care Costs
Several Republican presidential candidates claimed the Affordable Care Act is driving up health care costs.
Former Florida Gov. Jeb Bush said the law “drives up health care costs.” Former Arkansas Gov. Mike Huckabee said “American families are getting railroaded by … out-of-control health care costs.” And Louisiana Gov. Bobby Jindal said the law “has failed to accomplish its prime objective: Containing health care costs.”
That fact is that health care costs have increased “at historically low rates,” although not entirely or even mostly because of the law, according to the journal Health Affairs.
As we have written before, total health care expenditures for the U.S. have been rising at rates around 4 percent per year (see Table 1 of National Health Expenditures Data) from 2009, when Obama took office, to 2013, which is the most recent year for which data are available. Health care spending grew 3.8 percent in 2009, 3.9 percent in 2010 and 2011, 4.1 percent in 2012, and dropped to 3.6 percent in 2013.
Writing for the journal Health Affairs, economists and statisticians for the Office of the Actuary at the Centers for Medicare & Medicaid Services said for those five years, health care spending has grown “at historically low rates.” But that’s largely due to the economy, not the Affordable Care Act.
Health Affairs, December 2014: During the past five years, health care spending grew at historically low rates, between 3.6 percent and 4.1 percent each year. During 2010–13, this slow growth mirrored that of the overall economy, which increased 3.7–4.2 percent per year. … The key question is whether health spending growth will accelerate once economic conditions improve significantly; historical evidence suggests that it will.
$1,800 Less, or $3,000 More?
Many of the comments from both sides have centered on whether Americans were paying more or less under the ACA. The president and Texas Sen. Ted Cruz, a Republican presidential candidate, offered these competing versions of what has happened to employer-sponsored premiums:
Obama: If your family gets insurance through your job — so you’re not using the Affordable Care Act — you’re still paying about $1,800 less per year on average than you would be if we hadn’t done anything.
Cruz, June 24 on Fox News: Obamacare has driven health insurance premiums through the roof. Remember President Obama promised the average family’s health insurance premiums would drop $2,500 under Obamacare. In actuality, the average family’s premiums have risen $3,000. (At the 4:11 mark.)
The average premium for employer-sponsored family plans has gone up by $3,064 from 2010, when Obama signed the ACA, to 2014, according to the latest data available from the Kaiser Family Foundation’s annual employer survey conducted with the Health Research & Educational Trust. But such growth isn’t what one would call a “through the roof” increase. In fact, premiums have grown more slowly under Obama than they did under President George W. Bush, as we’ve explained before. They’ve grown more slowly since the ACA was passed than premiums did before the law.
That was Obama’s point, but he was wrong to attribute the slower growth in employer premiums solely to the ACA. In fact, as we said, experts have primarily attributed the slow growth in overall health care costs in recent years to the sluggish economy.
The president claimed that families that get their insurance through work are “paying about $1,800 less” on average than they would have been “if we hadn’t done anything.” That’s simply not the case. He’s giving the ACA credit for the entire difference between the higher rate of premium growth from 2000 to 2010, and the lower rate of premium growth from 2010 to 2014. Even his own Council of Economic Advisers, which calculated this $1,800 figure using the KFF employer surveys, says the ACA is only responsible for some of the slowdown in premium growth.
The CEA’s September 2014 report said that “[a] significant fraction of the recent slowdown in health care price inflation can be linked to Medicare reforms in the Affordable Care Act.” The CEA didn’t say what “fraction” that was.
We wrote about this talking point in March, and again earlier this month, when Obama improved upon his wording. He didn’t credit the ACA for the entire change in premium growth, as he did today. Obama also said families were paying $1,800 less on average, but the difference in premium growth is for the total premium — what employers contribute as well as what employees pay.
As for Cruz’s remarks, the president in the past did say that a health care overhaul would save families an average of $2,500, a claim we’ve been punching holes in since 2008. Obama wasn’t clear that he was talking about a slower growth in health care spending, compared with what families would spend without health care legislation.
But Cruz cites the $3,000 increase since 2010 in family premiums as if it were evidence of “through the roof” hikes. Actually, it’s evidence of relatively low premium growth.
The KFF surveys show that premiums have always gone up year to year, at least since the survey began in 1999. The 2014 KFF report notes that “the average family premium has grown less quickly over the last five years than it did between 2004 and 2009 or between 1999 and 2004.”
More Premium Claims
Other Republicans used the Supreme Court ruling to rehash old and misleading or incomplete claims about the Affordable Care Act’s impact on premiums.
For example, Republican National Committee Chairman Reince Priebus said, “What you will not hear from Democrats today is any information on how to make healthcare more affordable at a time when premiums are getting more expensive.”
And former Texas Gov. Rick Perry, a Republican candidate for president, said, “With individual premiums up more than 50 percent and nearly 5 million people losing their health plans, Americans deserve better than what we’re getting with Obamacare.”
Priebus is correct that premiums have, by and large, gotten more expensive — under Obama generally and since the passage of the Affordable Care Act in 2010. But as we just explained, the rate of growth in employer-sponsored insurance premiums has been slower than it was before the ACA. In other words, premiums are going up, just not as quickly as they were before.
As for Perry’s claim that “individual premiums [are] up more than 50 percent,” the important qualifier there that many may miss is that he’s talking only about those 6 percent of Americans who buy insurance on their own, the so-called individual market, as opposed to those who get insurance through an employer.
Perry’s campaign told us the 50 percent figure came from a Forbes story about an analysis from the conservative Manhattan Institute that concluded that individual market premiums rose by an average of 49 percent due to the health care law.
As we have noted previously, aside from the study focusing only on the relatively small percentage of Americans in the individual market, the institute didn’t adjust for the fact that the ACA requires certain minimum benefits, which many pre-ACA individual market plans didn’t have. By and large, the post-ACA plans are more robust (whether purchasers like or want that or not). So the analysis isn’t comparing similar types of plans before and after the ACA. And the institute’s figures don’t account for federal subsidies, which the Congressional Budget Office estimated would be extended to 80 percent of all those buying exchange plans nationwide.
Perry’s claim that “nearly 5 million people los[t] their health plans” is also dubious. As we reported in April 2014, that’s based on a high-end estimate by the Associated Press of those who got cancellation notices due to the requirements the ACA put on individual market plans. We found the AP’s state-by-state analysis appeared to be inflated in several states.
In a March 3, 2014, posting on the website of the journal Health Affairs, two researchers from the Urban Institute analyzed findings from a nationwide poll and concluded that “roughly 2.6 million people would have reported that their plan would no longer be offered due to noncompliance with the ACA.”
Cost of the Law
Bush and Huckabee also criticized the cost of the law without mentioning that the nonpartisan Congressional Budget Office says the law will actually reduce the deficits over the next 10 years.
Bush said the law “causes spending in Washington to skyrocket by $1.7 trillion.” Huckabee used an even higher figure, calling the law “a $2.2 trillion Washington disaster.”
In a report issued this month, CBO considered the financial impact of repealing the Affordable Care Act. The CBO said the coverage provisions in the law — mainly the exchange subsidies and Medicaid expansion — will cost $1.7 trillion over 10 years, from 2016 to 2025. So Bush was right about that.
However, tax revenue and cost-saving provisions in the law would more than offset the cost and, as a result, repealing the law would increase deficits by $353 billion over 10 years, from 2016 to 2025. (See table 4.)
‘Less Than $100 a Month’
Obama, in touting the law’s affordability, said the tax credits provided by the law — and upheld by the court — “have given about 8 in 10 people who buy insurance on the new marketplaces the choice of a health care plan that costs less than $100 a month.”
In February, Department of Health and Human Services Secretary Sylvia Mathews Burwell said the same thing: “Eight in 10 of those who signed up had at least one coverage option that cost $100 a month or less after tax credits.”
The key phrase in Obama’s sentence is “the choice.” The key word in Burwell’s statement is “option.” Neither is saying that 80 percent of buyers on the individual market are paying less than $100 a month.
In December 2014, the Department of Health and Human Services put out a statement encouraging people to shop around in 2015. In that statement, HHS said “it pays to shop” — noting that “nearly 8 in 10 (79 percent) current Marketplace enrollees can get coverage for $100 or less in 2015 after any applicable tax credits.”
How many enrollees are paying less than $100 a month? We asked the White House and the Department of Health and Human Services, but we did not get a response. If we do, we will update this item.
However, we do know that 69 percent of those who selected a plan through the federally facilitated marketplace and received tax credits paid less than $100 a month in 2014, according to an analysis by HHS’ Office of the Assistant Secretary for Planning and Evaluation. The report says that more than 5.4 million people selected a marketplace plan, and about 87 percent of them received tax credits. That means more than 3.2 million of the 4.7 million who received tax credits paid less than $100 a month for health insurance.
— By Lori Robertson, Eugene Kiely and Robert Farley
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