“He [President Obama] said 2,500 bucks on average per family lower cost. The Congressional Budget Office, nonpartisan group, says, no, it’s about 2,100 bucks more per family for individual coverage. In Ohio, we are told it’s a 41 percent increase next year. That’s more than 100 bucks a month for a family in Ohio.”
– Sen. Rob Portman (R-Ohio), interviewed by Fox News’s Greta van Susteren, Nov. 6, 2013
Senator Portman packs a lot of numbers in this comment on the Affordable Care Act that is worth unpacking and explaining. This is a great example of a politician mixing and matching data in a way that does not make too much sense.
Portman first refers to President Obama’s repeated claim, during the 2008 campaign, that his health plan would reduce costs by $2,500 a year for a typical family. As we have noted before, Obama’s claim at the time was quickly criticized by fact checkers, including The Fact Checker, as dubious and unrealistic. Moreover, the pledge came with a very large asterisk: He was not saying premiums would fall by $2,500, but that health-care costs per person would be that much lower than anticipated.
As a reminder, here’s a video of Obama making this claim nearly 20 times:
Portman might have remained on solid ground if he has simply referred to Obama’s pledge. But then he contrasted Obama’s $2,500 number with a Congressional Budget Office estimate that premiums would go up $2,100 under the health care law.
Oops. There are several problems with using this CBO number in this way.
First, the report Portman referenced was not a CBO estimate of the actual law as passed, but an earlier Senate version in 2009. The CBO has not done a similar estimate for the law, but in this case said that in 2016 average premiums for family policies would be $15,200, compared to $13,100 under the pre-Obamacare law. That’s how Portman comes up with an increase of $2,100.
Note that Portman cites an estimate for 2016, which is obviously more than two years away from now, but he acts as if the estimate is for today.
Moreover, the estimate is nearly five years old, making it increasingly less relevant. For instance, health-care inflation has turned out to be lower than expected. So Portman is talking about a half-decade-old prediction about rates two years from now.
Finally, as Table 1 in the report makes clear, there are a variety of factors that affect the premium estimate. The biggest reason for an increase in premiums is that the law mandates a comprehensive package of benefits — benefits that many plans in the individual market previously lacked. So that increase in insurance coverage boosts the premium of nongroup plans by about 30 percent, but the impact is negligible for large group plans, which already provided many of those benefits.
There are other factors that decrease the premiums, so the total difference (before subsidies) is an increase to 10 to 13 percent per person. For people receiving subsidies, the cost of premiums in the individual market actually declines nearly 60 percent, CBO calculates.
A big problem about comparing insurance rates before and after the law is that in many ways, you are comparing apples and oranges. The insurance premiums may be slightly higher, but the plans are also more robust.
Finally, Portman says that Ohio premiums are 41 percent higher because of the Affordable Care Act. This statistic comes from a news release quoting the state’s lieutenant governor, who makes it clear she is a foe of the law. The news release says individual exchange plan premiums are expected to increase an “average” of 41 percent in 2014, compared to 2013.
As we noted above, this is comparing apples to oranges. Moreover, it is a rather broad average of many different kinds of plans.
A more sophisticated analysis comes by way of the Manhattan Institute, which is also critical of the law and has methodically tracked premium prices in different states. Nevertheless, the Manhattan Institute declared Ohio one of the biggest winners in Obamacare, with average premium reductions of 21 percent.
Why the difference? It depends on the methodology. Instead of a simple average, the Manhattan Institute looked at the five cheapest plans, before and after the law.
“The reason we went with this approach is that we were trying to look at things from the standpoint of someone who doesn’t have coverage today because high premiums are a barrier,” said Avik Roy, a senior fellow at the Manhattan Institute. “All of the market research that has been done on the exchanges has shown that consumers are extremely sensitive to the price of premiums, and that their decision to purchase insurance is largely driven by premium costs. Hence, if someone is uninsured today because premiums are too high, the question of whether or not that person buys insurance in the future is also going to be driven by the lowest-priced plans available.”
The Manhattan Institute also adjusts pre-law prices to take into account people who could not get those low rates due to their worse health status. Finally, Roy noted that a large number of insurers chose to participate in the Ohio market, making possible a broad range of prices. That menu of options gets obscured in the straight-line average of the Ohio news release.
Update: Generally, The Fact Checker prefers to rely on official documents, and Portman’s spokeswoman, Caitlin Dunn, questioned why we would favor the work of an outside group rather than a study by the Ohio insurance commissioner. This is a fair point. In this case, the Manhattan Institute, which is no friend of the Affordable Care Act, produced a more sophisticated look at what is happening in the Ohio insurance market. But Dunn is correct that Portman did rely on an official document for this particular statistic and generally that is to be commended.
The Pinocchio Test
Portman has every right to zing Obama for his foolhardy claim that premium prices would decline by $2,500, though we should note that the White House has amended the goal to $2,000 in savings by 2019.
But he gets into trouble when he compares that figure to an out-of-date estimate and also cites a figure for premium rates in Ohio that, while official, appears overly simplistic. As it turns out, a think tank frequently cited by Republicans has concluded that Ohio has fared rather well in the post-Obamacare health-care world. Portman needs to update and amend his talking points.
Check out our candidate Pinocchio Tracker