White House Contradicts CBO, Misleads on Insurance Rate Increases

The President’s health care proposal this morning includes an FAQ section for various audiences – seniors, small business owners, the uninsured, etc. Here is one of the questions and answers for individuals who currently purchase insurance directly on the individual market (click for source):

I fall into this category myself, and it is a pretty important question for a couple of reasons. One, because there are an increasing number of individuals and families (18+ million) who buy health insurance coverage on the open market as opposed to receiving it through an employer. Secondly, because everyone, including the millions currently uninsured, would be legally required to have some form of insurance based on the mandate included in the President’s proposal and both the House and Senate bills

Obviously it would not help the cause of Democrats trying to pass this bill if the millions of people who buy insurance directly, and the millions more who are forced to do so by the insurance mandate, end up paying even higher premiums than they would under current law.

But here’s the thing – many of them will. At least according to the CBO. And the White House is deliberately and irresponsibly misleading the public by claiming otherwise.

Here is what the CBO had to say about this question in their analysis of the Senate bill from which the President’s proposal is largely based (emphasis added):

CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law. About half of those enrollees would receive government subsidies that would reduce their costs well below the premiums that would be charged for such policies under current law.

And the impact will be even worse for families who obtain coverage on the direct market as highlighted by this passage from the CBO:

Average premiums per policy in the nongroup market in 2016 would be roughly $5,800 for single policies and $15,200 for family policies under the proposal, compared with roughly $5,500 for single policies and $13,100 for family policies under current law.

For people like myself who obtain insurance coverage for their families directly, this means that according to the CBO we will face costs which on average are 16% higher compared to what they would be if the Democrats’ health reform bill is not passed.

This also means that the answer to the question of whether individuals and families who obtain insurance directly will pay more than they are paying today should undoubtably be “yes”. Directly contradicting the information provided by the White House.

Now I would be remiss if I did not point out that the primary reason for the increased costs projected by the CBO is that insurers would be legally required to provide more generous benefit plans under the Senate (and House) bills. Some of these cost increases, in fact, would be offset by the efficiencies gained from the insurance mandate, which would result in larger and healthier (i.e. younger) population pools. In other words, costs would increase, but so also would the average value of the benefit plans offered based on the CBO’s analysis.

But this is not the argument offered by the White House, which instead chose to falsely and simplistically claim that no one would pay more. The key to their slipperiness on their answer to this question is the phrase “if you buy coverage like you have today“. Since their plan mandates more comprehensive coverage than what these individuals may have today, at a higher cost. Even more slippery, the source of the claim that premiums are expected to drop by “14 to 20 percent” appears to be an unnamed “Senate Democratic staff” member. In other words, a completely partisan source, not the CBO.

This issue also highlights one of the key arguments made by opponents of the President’s plan, which is that it is largely based around costly government mandates at the expense of consumer choice.

What if those of us who purchase insurance directly do not want the more generous but more expensive plans mandated by Democrats? What if we prefer to actually assume more responsibility for our families’ healthcare expenses using high-deductible plans in exchange for lower monthly premiums? And why should younger and healthier people be mandated to obtain such comprehensive (and expensive) coverage?

Most of all, why does the White House persist in providing such false and misleading information about even basic details such as these?

They seem to be under the impression that the public is largely opposed to reform because they do not understand the details. I think the reason is much simpler than this. We are sick and tired of being misled, and as a result we do not trust the President or Democrats in Congress to enact legislation which will impact healthcare for all of our families. We have had enough.