Fact-Checking Obama’s Health-Care Speech

By Grace-Marie Turner

The fact checkers are likely to run out of Pinocchios after President Obama’s speech today to tout ObamaCare at the White House.

The biggest whopper is saying that the health law already is expanding access to affordable health coverage. Evidence across the states shows that premiums will increase in many states and for many consumers by double digits or more.

The White House is bragging wildly about a New York Times article, which is more like a news release than a news report, that says individuals shopping for health insurance in New York would see their premiums cut in half, according to figures released by the state.

Avik Roy of the Manhattan Institute writes that “New York’s premiums will remain among the costliest in the nation after Obamacare becomes fully operational. And the unique history of how the Empire State destroyed its individual health-insurance market—using policies quite similar to Obamacare’s—will translate, at best, to only a handful of other states.”

“In the vast majority of states,” he continues, “Obamacare has the net effect of raising premiums by a lot, which has given rise to the term ‘rate shock.’ In California, for example, a healthy 40-year-old today can pay $94 per month in the individual market; that rises to $234 a month under Obamacare: an increase of 149 percent.”

And California is not an outlier.  The Ohio Department of Insurance announced that the average individual market health insurance premium in 2014 will cost 88% more. According to Ohio insurance regulators: “Consumers will have fewer choices and pay much higher premiums for the health insurance starting in 2014 … Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223 … the average to cover those costs in 2014 is $420.”

In Rhode Island, Health Insurance Commissioner Christopher Koeller announced that new rates for large employers will be 9.6 to 12% higher.

Avik has taken a deep dive into the claims about premium reductions in New York and finds New York’s premiums will remain among the costliest in the nation after Obamacare becomes fully operational. Legislation passed over the last two decades has driven health insurance premiums in the state to among the highest in the country.  Premiums have nowhere to go but down, and the primary driver of the lower premiums is the widely-despised individual mandate which will force healthier,  reluctant buyers into the exchanges.

In New York, legislation was passed in 1992 barring insurers from charging different premiums to people in different age groups.  ObamaCare adopted a modified, but still-distorting version of this community rating. In addition, insurers were required to sell policies to people even if they wait until they are sick to sign up — guaranteed issue. Welcome to the world of ObamaCare.

Others states that haven’t done as much damage to their individual health insurance markets in the past will find that ObamaCare does it for them. As New York found, insurance regulations that distort market pricing have the effect of driving up costs, primarily by driving healthy people out of the market.

The young people that the president wants most to attract to the market for health insurance will find that the average $200 a month in premiums they will have to pay, even after receiving their share of $1 trillion in ObamaCare taxpayer subsidies, will lead to a real awakening of the costs of the law.

Posted on National Review Online July 18, 2013

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About the author

Grace-Marie Turner is president of the Galen Institute, a public policy research organization that she founded in 1995 to promote an informed debate over free-market ideas for health reform.

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