“One study shows that through new options created by the Affordable Care Act, nearly six in 10 uninsured Americans will find that they can get coverage for less than $100 a month. Through the marketplaces you can get health insurance for what may be the equivalent of your cell phone bill. Or your cable bill.”
— President Obama, remarks on the Affordable Care Act, Oct. 21, 2013
When we heard the president tout this figure, we wondered: Who did this study? And what did it actually say?
Whether health insurance premiums go up or go down is a central part of the debate over the Affordable Care Act, a.k.a. Obamacare. The research and policy arm of the Department of Health and Human Services released a report last month asserting premiums before tax credits were 16 percent lower than projected — a claim immediately challenged by skeptics of the law as a “load of spin.”
So what about the study referenced by the president? The study, titled “Fifty-Six Percent of the Uninsured could pay $100 or less per month for Coverage in 2014,” turns out to also be an in-house study produced by HHS — a fact that the president failed to mention. Moreover, it really is not based on an examination of premiums at all, but household composition and income data.
Instead, the study considered the universe of people who might qualify for premium tax credits based on their income. The law, for instance, says that someone earning $17,235 a year will pay just four percent of their income ($57) for the second lowest-cost plan; the tax credit will make up the difference, no matter what the premium turns out to be.
All told, the report says that 10.8 million people, or about 49 percent of the uninsured eligible for the exchanges, may pay $100 or less per person for coverage in 2014, either by being able to get the second lowest-cost silver plan or the lowest-cost bronze plan.
The report then adds in people that would qualify for expanded Medicaid in the states that have chosen to do so; that adds another 12.4 million uninsured Americans, who the report says would pay “either no premium or a nominal premium.” So that adds up to 23.2 million people, or 56 percent, of the 41.3 million eligible uninsured. Medicaid coverage is generally considered poor quality, with limited access to physicians. But it is an option available on the HealthCare.gov Web site.
Finally, this $100 number is per-person, so a family plan could be considerably more.
Now let’s look back at the president’s statement. He said “through new options created by the Affordable Care Act, nearly six in 10 uninsured Americans will find that they can get coverage for less than $100 a month.”
The president thus puts in more definitive terms — “will” — what is really an estimate by government analysts. The phrase “through new options created by the Affordable Care Act” appears to design to cover the Medicaid expansion, which accounts for half the people covered for less than $100, even though he only briefly mentioned Medicaid in his speech. Most of his speech focused on buying insurance on the exchanges.
As we have mentioned before, there are winners and losers with the advent of Obamacare. Some analysts argue that people who do not qualify for the tax credits — which is largely responsible for the president’s $100 figure — will be hit with much higher insurance premiums. But there are going to be winners too.
One of those winners is John Mier of Leetsdale, Penn., who the president cited in his speech as seeing his monthly premiums plunge from $1,600 a month to $692 a month. The Fact Checker spoke to Mier, who said he previously had group insurance, for him and his wife, as he put her on the payroll of his energy efficiency firm. “We’re aging dinosaurs” with a variety of ailments, he said, with an income of about $60,000 to $70,000 that puts them out of range of tax subsidies.
Using an Excel spreadsheet, he tried to calculate what the total cost of insurance, co-payments, medicine, and lab fees would be. Under his old insurance, he said, it came to $26,720, while with the plan he selected on healthcare.gov, the total was $12,517. Obama had cited just the cost of the premiums, so the potential savings for Mier and his wife are even more impressive when all potential health care costs are considered.
The Pinocchio Test
Anecdotal evidence, of course, only takes you so far. In the meantime, should we ding the president for citing a government study — without identifying it as such — that rests a lot on the Medicaid expansion to make the figures work?
At this point, we think we should monitor what actually happens rather than rush to judgment. The assumptions in the HHS study are relatively sound, and the rollout of the health care law may validate its findings. The president would have been on more solid ground if he had clearly labeled this as a government study.
But for the moment, we will label this claim as Verdict Pending. (Update: PolitiFact gave this claim a rating of “mostly true.”)
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