ObamaCare Rate Shock is Very Real

There has been a lot of talk over the last few weeks about “rate shock” thanks to ObamaCare. While apologists for the law insist that it will still be beneficial, premiums for insurance plans in California’s ObamaCare exchange could jump by a daunting 146%, with young people on the losing end of the increases.

It was documented months ago that young people, in particular, would be seeing higher premiums because of ObamaCare. Why? Because the law requires insurance companies to cover pre-existing conditions and prevents age-discrimination. Like any other business that has to conform to a government mandate, insurance companies have to find a place to make up the cost to make sure that they are both maintaining their reserves and earning a profit for their shareholders.

Some, like Ezra Klein, insist that this is a “debate we had.” But Peter Suderman points out that all of the rhetoric leading up and after the passage of ObamaCare never mentioned anything about rising premiums — in fact, it was, as noted above, quite the opposite:

Liberal wonks like Klein may have talked about it—we’ll get to that a little later. But the president and his administration did not talk about it much at all. Rather, the overarching message from the White House, and from the law’s supporters generally, was that Obamacare would cause health insurance premiums to drop.

Let’s go back in time to when President Obama first began to make the case for his health care overhaul. Here’s how he touted his health plan in May 2007, early in his run for office. “If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less.” On the campaign trail in 2008, Obama continued to sell the law as a way to lower health premiums, promising at least 15 times to reduce health premiums for families by $2500 on average. And as Buzzfeed notes, Obama didn’t stop pointing to lower premiums when he made it into the White House in 2009. In May of that year, he told C-SPAN that if health industry groups commit to savings—“we end up saving $2 trillion…a lot of those savings can go back into the pockets of American consumers in the form of lower premiums. That’s what we are driving for.”

From the very beginning, in other words, Obama’s message was not that the law would result in higher premiums, but better coverage. It was that the law would lower premiums, end of story.
headline from the White House blog on November 4, 2009 makes it clear that the essential message about premiums hadn’t changed: “Word from the White House: Objective Analysis Shows Reform will Help Small Business, Lower Premiums for American Families.” [emphasis added] The “objective analysis” in question was a report from Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, and a key architect of both Obamacare and the Massachusetts health care overhaul.

The White House blog post touted Gruber’s conclusion that the health care legislation would save individuals anywhere from $500 to $3000 a year, and families even more. And those savings, the post emphasized, would “comein addition to the more generous benefits consumers would receive by purchasing insurance through the newly  created exchange”—as well as “in addition to increased protections” for individuals with preexisting conditions. Gruber even claimed that the savings would come for those who did not qualify for subsidies. Low-income individuals eligible for assistance, he said, the savings would be much larger.

Make sure to read Suderman’s entire column on this. It’s great.

This unsurprising revelation has ObamaCare’s supporters playing defense; after all, they endlessly claimed that the law would reduce premiums. As Mary Katherine Ham explained earlier this week, they constantly have to move the goalposts; meaning that they don’t want to admit that the high-expectations set when the law was going through Congress will actually be met. What they’re now saying is, basically, “How dare anyone expect ObamaCare to do what we said it would do!”

It’s a convenient position for the law’s apologist to say that they knew there would be tradeoffs because they rarely talked about them. And when they did, t was nearly always in the broader context of claims that insurance premiums would go down. It’s incredibly misleading. If we actually had this debate in later 2009 and early 2010, it’s not unreasonable to suggest that ObamaCare may not have become law.


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