New Data Settles the Debate: Obamacare Is Making Health Insurance More Affordable, Not Less

Change in Obamacare Premiums, 2014-2015

It’s that time of year again.

No, not the holiday season. I’m talking about Obamacare season.

In the second year of our new annual tradition, the exchanges are open for enrollment, which begs the question: What have we learned since last time? Were the naysayers proven right, or did Obamacare really make health insurance more affordable, as was intended?

With a new year of data to answer these questions, once more into the breach we go…

At this time last year, the inaugural enrollment period was not going well. The website was malfunctioning, people were losing plans they wanted to keep, and the media was running scare stories about “sticker shock.” I argued, on the contrary, that the website would get fixed in a hurry, most people were getting better plans, and the exchanges were actually reducing the cost of health insurance.

The first prediction was clearly vindicated. The website got fixed, and 8 million Americans enrolled.

The second prediction was also a victory for Obamacare. Before the exchanges opened, 16.4 percent of Americans were uninsured. A year later, only 11.3 percent were uninsured.

And this isn’t only due to the Medicaid expansion. In states that did not expand Medicaid, the uninsured rate fell from 18.2 percent to 13.8 percent. Clearly, the exchanges didn’t just replace old plans. They created new ones for people who didn’t have any.

They didn’t reduce coverage. They expanded it.

And according to the latest Gallup poll, the people who got that coverage are just as happy with it as the people with non-exchange insurance — and the people on the exchange are actually happier with their costs than everyone else.

Which brings us to the third prediction. This one was more controversial.

Earlier this year, I analyzed the many studies of pre- and post-Obamacare costs and came to the conclusion: “On average, Obamacare clearly lowered the cost of health insurance.”

Two of the experts who wrote one of those studies, Paul Howard and Yevgeniy Feyman, disagreed with me. They argued that I misinterpreted their estimates by comparing Kaiser’s estimate for all ages to their estimate for 27-year-olds. But they’re the ones who made the mistake. Apparently, they misread the Kaiser estimate I cited, which referred to 18-to-34-year-olds, not all age groups. I chose this estimate specifically because it was comparable to theirs.

Then, they cited other studies that used the same faulty methodology that they used, and they claimed that I “ignored” those studies — when in fact I explained exactly why those kinds of studies were inaccurate.

Finally, they suggested that I was conflating premiums before subsidies with the cost after subsidies, overlooking the price paid by taxpayers. At this point, I was wondering whether they even read my original article, where I made a clear distinction between the two. The evidence suggested, I wrote, that the average premium increase before subsidies was small — maybe zero. And even if it did increase, that increase was due to people buying more generous plans because now they could afford them. And the point of the subsidies was to make health insurance costs go down for the people who needed it the most — which is exactly what happened.

Whew. You can see what I meant when I said it was controversial.

The good news is, now we have a second year of data to settle the debate, and this data is better because we can compare the same level of plans with the same amount of coverage on the same exchanges, apples-to-apples, as opposed to the pre-Obamacare plans, which were all over the map. Literally.

The nonpartisan Kaiser Family Foundation has examined the “benchmark” silver plans in major cities in all 50 states, and they’ve found that the monthly premiums have increased 2 percent, on average, since last year. That is slower than health insurance premiums have grown in any year since we’ve started recording the data. Only a couple years ago, health insurance costs were growing 5 percent per year. During the Bush administration, they were growing more than 10 percent per year. Two percent is unheard of.

And that’s only the average. In nearly half of those cities, premiums are falling on the exchanges. That’s unprecedented. Health insurance premiums almost never fall. And when you compare premiums after subsidies, 90 percent of cities are paying less than they did last year!

Now, maybe you still don’t like Obamacare. Maybe you’d prefer a simpler, cheaper system. (Who wouldn’t?) But there is one thing you simply cannot deny: Over the past year, health insurance has become more affordable for the non-group market, and the result will be better health care for millions of Americans who need it and wouldn’t have it if Obamacare didn’t exist.

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This op-ed was originally published in today’s Huffington Post.

Finally! Someone Explains What All Those Obamacare Numbers Mean!

You’re going to hear a lot about Obamacare this fall, especially from Republicans. They’ll try to convince you that it was a bad deal. They’ll throw numbers at you to make you think that the cost of health insurance is spiraling out of control. In all likelihood, those numbers will be wrong, but how will you know? There are so many numbers flying around out there that even the experts are having trouble keeping track.

That’s why it’s time for a math lesson. After reading this article, you’ll know what the numbers mean — and which ones you should trust. No candidate will be able to fool you.

Millian Medical Index

And you won’t even need a calculator.

First of all, you have to understand that we’re only talking about the individual market, where people buy insurance if they’re not covered by their employer or a government program. That means the “individual mandate” and the “government-run exchanges” only affect 7 percent of the population. For the majority of the population covered by their employer, the cost of health insurance rose less in 2014 than it had in any year since the Milliman Medical Index started keeping track. We can probably thank Obamacare’s cost control provisions for some of that achievement, but that’s a conversation for another day.

For now, let’s focus on the individual market. Before Obamacare, insurers charged low rates to healthy people and high rates to sick people, making insurance unaffordable for the people who needed it the most. Obamacare banned discrimination against sick people and mandated that all people must purchase insurance. Without that mandate, insurers would have raised rates to cover the new sick customers, and healthy people would have refused to pay the new high rates, driving rates up even higher as the population became sicker on average.

When the law was passed, the Congressional Budget Office predicted that premiums would increase 10 to 13 percent, but only because people would be receiving more generous coverage. Obamacare required every health insurance plan to meet basic minimum standards. Additionally, by making it more affordable, more people would want to buy more generous coverage. If you compared plans with the same level of coverage, the CBO predicted that premiums would actually go down.

When states started announcing the premiums for their new “exchanges,” you probably started hearing about “sticker shock.” By comparing the new premiums to old quotes from health insurance websites, Obamacare critics claimed that the law had drastically raised prices. The problem with their argument was that the quotes on the old websites were very unreliable. They rarely reflected what insurers would actually charge you, once they factored in your medical history, age, gender, etc. In fact, many Americans would be denied coverage altogether. Anyone who knew anything about health insurance knew that the website quotes were lowballing the cost.

State governments like California countered by making a more reasonable comparison. They argued that the new exchange premiums were actually lower than premiums for small group coverage, for which they had better data. Obamacare critics weren’t satisfied. Small group plans may have been more expensive than the plans on the new exchange, but that’s because they offered more generous coverage.

The Manhattan Institute, led by conservative health expert Avik Roy, tried to find a middle ground by adjusting the quotes on the health insurance websites, raising the estimates for people who were “surcharged” or denied, and finding that Obamacare increased prices by 41 percent.

The problem with Roy’s analysis was that his adjusted numbers didn’t match reality. Before Obamacare, Roy suggested that 27-year-olds — the ones who were being hit the hardest, he argued — paid between $1,596 (men) and $1,980 (women) in average annual premiums. But the Kaiser Family Foundation conducted a survey in 2010 and found that they were actually paying closer to $2,630. Across the board, Roy had underestimated the pre-Obamacare cost of health insurance, and he wasn’t including costs that consumers paid out of their own pockets.

Last month, three Wharton economists used the Current Population Survey to calculate a more accurate estimate of the average pre-Obamacare premium. They found that it was basically identical to the lowest-cost plan available on the Obamacare exchanges. Compared to more expensive plans, of course, it was cheaper, but when they factored in out-of-pocket costs, they found that the new plans were 14 to 28 percent more expensive than the old ones, only slightly higher than the CBO’s original predictions.

Monthly Subsidized Premiums on Federal Exchange

But wait. The Wharton study only counted people who purchased insurance, not people who were denied or who refused because the insurer’s quote was too expensive. We’ll never know what that quote was, but we can assume it would significantly raise our estimate of the average premium. To ignore those people — and there were millions of them — is to say that they don’t matter, even though Obamacare was designed specifically with them in mind.

The Wharton study also doesn’t include the tax credits that the federal government uses to subsidize low-to-middle income buyers on the exchanges. Last month, the government announced that 87 percent of shoppers received a subsidy on the federal exchange, bringing their average monthly premium down from $346 to only $82!

That’s a 76 percent reduction, and it more than makes up for the 14 to 28 percent premium increase, which may not be much of an increase after all if you include people who didn’t buy insurance in the past.

Bottom line: On average, Obamacare clearly lowered the cost of health insurance.

Sure, some people will pay higher rates, but you have to remember that those people only paid low rates in the past because insurers were discriminating against sick people. The new market is much fairer and more affordable for more people — a fact that you might want to point out to Republicans on the campaign trail this fall.

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Similar versions of this op-ed were published in today’s South Florida Sun-Sentinel and Huffington Post.

Yes, Obamacare Critics, Health Insurance Does Make You Healthier

Michael Barone and Charles Krauthammer have some medical advice for you: Don’t get health insurance, they say. It won’t make you healthier. It’s a waste of money.

Obamacare Enrollment SurgeThey must be desperate. They don’t want to admit that they’ve run out of criticisms of Obamacare. The website is working, enrollments are surging, and millions of Americans are getting affordablehigh-quality health insurance. They couldn’t deny these facts, so they needed a new argument to discredit the law — and they found it tucked away in the New England Journal of Medicine.

In 2008, Oregon conducted an experiment. They held a random lottery. They picked 20,745 names out of a waiting list of 90,000 low-income adults who wanted to sign up for Medicaid. Of the winners, half received Medicaid, and half did not. After two years, they compared the two groups to see if the ones who had Medicaid were any better off.

Barone and Krauthammer claim that the Medicaid group did not have better health than the uninsured group, proving the futility of health insurance, but their conclusion is based on a very narrow, selective reading of the evidence.

It’s true that the individuals on Medicaid did not fare any better than their uninsured counterparts on blood tests for cholesterol, blood sugar, and blood pressure. But it’s also true that the Medicaid patients scored higher on the mental quality-of-life test, experienced significantly lower rates of depression, and reported that they felt healthier.

The Medicaid patients also experienced significantly less financial strain. They were 25 percent less likely to have an unpaid medical bill sent to a collection agency.

In other words, health insurance has significant mental and financial benefits.

In this study, the physical benefits are less clear, but that’s not surprising, given that it only lasted two years and it only measured three simple blood levels. Fortunately, other researchers have measured more than just cholesterol.

A 2008 study in the prestigious medical journal The Lancet, for example, revealed that uninsured patients were significantly more likely to develop advanced-stage cancer because they didn’t receive early screening to detect it.

A year later, Harvard researchers published a study in the Annals of Surgery showing that uninsured patients who arrived at the emergency room with traumatic injuries were almost twice as likely to die in the hospital as patients with insurance, even if they had the same race, gender, age, and severity of injury. Later that year, a similar study was conducted at the Boston Children’s Hospital and published in the Journal of Pediatric Surgery. It found that uninsured children were more than three times as likely to die from traumatic injuries as children with commercial insurance.

And if all that wasn’t enough to convince you, the American Journal of Public Health published a study that same year comparing the death rates of the insured and the uninsured when they had the same education, income, weight, rates of smoking and drinking, etc. They concluded that 44,789 Americans die every year simply because they don’t have health insurance.

That is the bottom line we should be talking about.

If the Oregon experiment were carried out beyond two years, the differences between the insured and the uninsured would accumulate. They found that the Medicaid patients were 70 percent more likely to visit the doctor, 20 percent more likely to have their cholesterol monitored, and for the women, 60 percent more likely to get a mammogram. Those kinds of preventive measures don’t make a huge impact in two years, but in the long run, they can mean the difference between life and death.

Health insurance is so beneficial to your health, in fact, that its effects spillover and benefit those of us around you. Studies have shown, for instance, that companies that offer health insurance are more productive because insured workers take 52 percent fewer “sick days” than their uninsured co-workers.

I have to wonder if Barone and Krauthammer have ever even met anyone on Medicaid. I wonder if they know the terrible fear that uninsured Americans feel when they get sick and they’re forced to choose between astronomical medical bills and untreated illness.

I think they should find out. If they’re so confident that health insurance doesn’t affect your health, then I would like to issue this challenge to them: Give up your own health insurance. Don’t waste another penny on it. Join the ranks of the uninsured.

If not, if they’re unwilling to follow their own advice, then they should stop giving it. They should stop spreading misinformation that can hurt millions of Americans who read their op-ed columns and who depend on the access to lifesaving medical care that only health insurance can provide.

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This op-ed was published in today’s Huffington Post. An abbreviated version was published in the South Florida Sun-Sentinel.

Does Obamacare Infringe on Our Liberty? Or Does It Give Us Even More Freedom?

What right does the government have to make you buy health insurance?

That’s the question that riles Obamacare critics the most. It’s not the premiums or the website or the dropped coverage. It’s the infringement on their liberty.

Does Government Threaten Our Freedom?You hear it all the time: “This is a free country!” That’s what everybody says. But what do they really mean? Do they know what freedom is?

It seems obvious at first. Freedom is lack of coercion. Therefore, anything the government makes you do infringes on your freedom.

But there are different types of coercion, and the government isn’t the only one doing the coercing.

Let’s say that you want your daughter to attend the best school in America. But you can’t afford the tuition. Do you really have freedom of choice? If you choose the school you want, they won’t let you through the front door. If you force your way in, they’ll arrest you.

So you “choose” a more affordable school. You wanted a better school, but they forced you to settle for a different one. Sounds like coercion to me.

Let’s consider another example. You want to retire at the age of 65. You’ve worked hard throughout your entire adult life. Unfortunately, wages haven’t risen, and the bills kept piling up. You saved as much as you could, but it’s only enough to live off for a couple years. Oh, and one more thing: Social Security and Medicare don’t exist.

If you “choose” to retire, you’ll go broke. You’ll go without preventive health care. Your chances of dying early will increase significantly.

So you have a choice: Keep working or die young.

In this case, you actually have less freedom because the government is less involved. Without Social Security and Medicare, you do not have the freedom to choose a long, healthy retirement.

Freedom requires more than the absence of laws and taxes. True freedom of choice requires the capability to make that choice — and the free market doesn’t always give us that capability.

Jobs are scarce. Most of us don’t have the freedom to work anywhere we want. We take what we can get. For many of us, that means working at a company that doesn’t pay for our health insurance. So we “choose” to buy insurance on the individual market.

Before Obamacare, the individual market charged really low rates to healthy people and really high rates to sick people. So the people who needed insurance the most couldn’t afford it. They didn’t have the capability — and therefore the freedom — to buy it.

Obamacare outlaws that kind of discrimination. It requires insurers to charge the same rates to healthy and sick people alike, and that means that healthy people will have to pay higher rates. Some of them won’t want to, so they’ll stop buying insurance. When they drop out, they leave behind the sicker people who are most costly to insure, forcing insurers to raise rates even more. It’s a vicious cycle, a “death spiral,” that results in almost everyone being priced out of the market.

Virtually no one will have the freedom to buy health insurance on the individual market.

And that’s why we have an individual mandate. If the healthy people don’t drop out, there’s no death spiral, and the insurance remains affordable for the people who need it the most.

The government gives them a freedom that the free market cannot. It gives them the capability to purchase health insurance.

If we choose not to buy insurance, we pay a penalty. As Supreme Court Chief Justice John Roberts has written, “it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income.” Those taxes pay for our roads and Army and Navy and Social Security and Medicare — and those things give us the freedom to live a life that we often take for granted. Without those taxes, without those government-funded investments, we could not call ourselves a free country.

In the same way, without Obamacare, without the government making us buy health insurance, we would be condemning millions of Americans to lives without health care. We would be restricting their freedom. And what right do we have to do that?

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This op-ed was published in today’s South Florida Sun-Sentinel and Huffington Post.

Good News: Obamacare Clearly Isn’t Stifling the Economy

Part-Time Employment Before and After ACA

The latest GDP numbers are bad news for Obamacare critics.

You’d think that everyone would be happy when the Commerce Department announced that our economy grew by a whopping 4.1 percent in the third quarter of this year. But according to the naysayers, that wasn’t supposed to happen.

One of their biggest complaints against Obamacare was that it would stifle the economy. Penalties and fines would raise the cost of doing business. High premiums would impoverish middle-class families. Forcing businesses to offer health insurance to full-time employees would make them switch to part-time employees — or stop hiring altogether.

And yet, the more of the law that’s implemented, the better the economy seems to perform. How can that be?

Well, for one thing, the cost of Obamacare has been greatly exaggerated. The law states that companies with more than 50 workers must offer health insurance to their full-time employees or pay a fine of $2,000 per employee. That may sound like a lot, but it’s a heck of a lot less than most companies are already paying for health insurance, which costs an average of $15,073 per worker.

“You’ve got 5.7 million firms in the U.S.,” says health economist Mark Duggan. “Only 210,000 have more than 50 employees. So 96 percent of firms aren’t affected. Then if you look among those firms with 50 or more employees, something on the order of 95 percent offer health insurance.”

When you add it all up, the “employer mandate” probably affects less than 1 percent of the workforce. Definitely not enough to make a dent in the economy.

So it shouldn’t come as a surprise that there is no evidence that Obamacare is turning us into a “part-time” economy. Since President Obama signed the law, the economy has added millions of full-time jobs, while part-time jobs have actually declined. A lower percentage of workers are part-time than they were under President Reagan in the 1980s. Over the past year, there has been a significant decline in the number of people working part-time “for involuntary economic reasons.” And when you look at the part-time definition of “less than 30 hours per week,” the number of workers who fall just below that cutoff has been growing slower than the number of workers just above it.

And it makes even less sense to argue that the employer mandate would cause employers to drop coverage. If they’re offering coverage, it’s because their employees want it, and they want to attract and retain good employees. They’re not going to stop just because the penalty costs less than the insurance. If they wanted to drop coverage, they could have done it before Obamacare, when there wasn’t a penalty at all. In fact, in the years after Massachusetts enacted an employer mandate, their employer-based insurance coverage actually increased while the rest of the nation’s decreased.

What’s more, those small businesses that do offer coverage will receive a sizeable tax credit. For the small businesses that already offer coverage, this is a huge windfall. For the ones that don’t, the tax credit may make it profitable for them to do so. And since they fall under the 50-employee cutoff, they won’t be penalized if they don’t offer coverage.

The only remaining question mark is exactly how the employer mandate will affect insurance premiums. Since it doesn’t go into effect until the beginning of 2015, we’ll have to wait until the end of 2014 to find out. Just like this year’s fiasco, there will probably be a lot of complaints about dropped coverage and raised rates, and then those complaints will fade away as people realize that most of them can get better coverage and, on average, rates are going down.

And, as an added bonus, those Americans who do lose their employer-based coverage now have the comfort of knowing that they won’t be denied coverage or charged discriminatory rates on the individual market, thanks to the individual mandate and the online marketplace that are now in place. They will get affordable insurance, and they will live healthier lives, and they will continue to contribute to the rising productivity that is making our economy grow so fast.

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This op-ed was published in the Huffington Post, and a slightly edited version was published in the South Florida Sun-Sentinel.