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Home Publications Blogs Beat the Press Washington Post Uses Faulty Logic to Highlight Anger Over Obamacare

Washington Post Uses Faulty Logic to Highlight Anger Over Obamacare

Monday, 04 November 2013 05:19

The Washington Post lead front page article has a headline telling readers that "sticker shock" is leading to "anger" over Obamacare. Whatever the reality of this anger, the information presented for the piece's poster child is wrong.

The article begins by telling readers about a 58-year-old lawyer in Washington, DC who will see her premiums increase from $297 a month to $463 a month with a policy purchased through the exchange. The piece tells that with the policy purchased through the exchange her maximum out of pocket expenses would double. It then informs readers:

"That means she could end up paying at least $5,000 more a year than she does now."

This conclusion does not follow. If this lawyer actually did hit the new maximum under the policy available through the exchanges, then she would almost certainly have been dropped from her other plan, since the insurer would otherwise be losing money on her. (If we assume the information given here is accurate, then if she just hit the maximum deductible for the exchange plan, it implies that her current insurer would have been paying out $3020 more over the course of the year than the insurer in the exchange. This is on a policy for which it collects $3,564 in premiums.)

Under current law, insurers can drop people with high bills or raise their rates. That is the point of Obamacare; it protects people who get serious illnesses from rate hikes or losing their insurance.

Comments (8)Add Comment
It's About the 3% and $6,000 Cap on Out of Pocket
written by Last Mover, November 04, 2013 5:13

Gruber broke down the A.C.A. “winners” and “losers” for me. About eighty per cent of Americans are more or less left alone by the health-care act—largely people who have health insurance through their employers. About fourteen per cent of Americans are clear winners: they are currently uninsured and will have access to an affordable insurance policy under the A.C.A.

But much of the current controversy involves the six per cent of Americans who buy their own health care on the individual market, which the A.C.A. has dramatically reformed. Gruber argued that half of these people (three per cent of all Americans) will have little change to their polices. “They have to buy new plans, but they will be pretty similar to what they had before,” he said. “It will essentially be relabeling.”

The other half, however, also three per cent of the population, will have to buy a new product that complies with the A.C.A.’s more stringent requirements for individual plans. A significant portion of these roughly nine million Americans will be forced to buy a new insurance policy with higher premiums than they currently pay. The primary reason for the increased cost is that the A.C.A. bans any plan that would require a people who get sick to pay medical fees greater than six thousand dollars per year. In other words, this was a deliberate policy decision that the White House and Congress made to raise the quality—and thus the premiums—of insurance policies at the bottom end of the individual market.

“We’ve decided as a society that we don’t want people to have insurance plans that expose them to more than six thousand dollars in out-of-pocket expenses,” Gruber said. Obama obviously should have known that his blanket statement about “keeping what you have” could not apply to this class of policyholders.

Why aren't the sock puppets headlining with celebration that 14% now get insurance who didn't have it?

Why aren't the sock puppets headlining with celebration that the higher premiums for the 3% reduce out of pocket costs and force insurers to compete with themselves as well as negotiate down these costs with health care providers?

Why aren't the sock puppets headlining that America would not be in this mess if its health care costs were not more than double that of other developed nations, and that's the reason for all the subsidies?
written by AndyfromTucson, November 04, 2013 10:52
You might want to double-check the assertion that health insurance companies can drop people with high bills or raise their rates. An insurance agent recently told me that with health insurance there are pre-ACA regulations that prohibited dropping or raising rates on people with high claims.
Totally wrong about insurers cancelling coverage
written by tom faranda, November 04, 2013 11:52
"Under current law, insurers can drop people with high bills or raise their rates. That is the point of Obamacare; it protects people who get serious illnesses from rate hikes or losing their insurance."

Totally incorrect. I have been doing employee benefits for small companies and occasionally individuals in NY, NJ, & CT for 30 years. Rates cannot be raised on an individual or small company (under 50 ees.) basis based on claim history, and coverage cannot be cancelled. Where you got that idea - well I hope your other research is better than your healthcare research.
What is a "sock puppet"
written by tom faranda, November 04, 2013 11:57
Just wonderin'?
North Carolina requires individual coverage to be renewable
written by Richard Genz, November 04, 2013 12:04
Seconding Andy's comment about pre-ACA regs preventing companies from canceling individual policies, here's information from the NC Consumer Guide to Health Insurance published by NC Dept of Insurance

"...once an individual is covered,
an insurance company may not terminate or
refuse to renew an individual policy unless
it offers each affected individual the option
to purchase any other individual health
insurance policy that it offers. This feature is
known as “guaranteed renewability.” Please
note that a company may decide to terminate
all of its individual health insurance policies
with proper advance notice."

http://www.ncdoi.com/_Publications/Consumer Guide To Health Insurance_CHE1_SmPU.pdf
written by Susan, November 04, 2013 7:18
Tom and Andy,

You are thinking of the employee (group) market:

Unlike the cushy world of taxpayer subsidised employee benefits for all employees - no matter sick or well - when you try to buy a policy on the individual market, you ARE refused if you have a pre existing condition, or if mild, charged exorbitantly.

That's what ACA ended for us. No more death panel questions for us on the individual market now too! Employees had that goodie already.
individual market insurance
written by tom faranda, November 04, 2013 11:03
Susan I am familiar with the individual market in NY, NJ, and CT as well as the group market. What state are you in? For NY and NJ you cannot be turned down for an individual policy. For CT, you can be charged a higher rate - you go into a special pool - but you cannot be turned down. There can in certain situation - if you have no prior coverage - be a limit on pre-existing benefits, but the limit ends after no more than a year. If you have prior coverage, there is no pre-ex. exclusion.
Crappiness of InsuranceCos is not the subject of the WaPo article
written by quixote, November 06, 2013 7:45
Their crappiness certainly deserves amny articles. And, yes, there were plenty of stories of them dropping people who actually had to use the insurance they'd bought.

But that's not WaPo's subject. They're talking about the *unexpected* bait-and-switch of Obama saying "You can keep your policies and your doctors" versus "Well, no, actually you can't. Deal with it." People were hoping for better treatment from Obama, not the same-old, same-old.

Plus, it remains to be seen how good these new insurance plans are. Sure, they list lots of covered procedures, but careful examination shows that it may only apply at a very restricted set of hospitals and doctors. And that anything out of network is entirely on your own wallet. It doesn't even count against your deductible. That's not going to go over all that well either, if it's true.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.