The Homa Files

Punchline: Buyers, beware: President Barack Obama says his health care overhaul will lower premiums by double digits, but check the fine print.

Note: from the left-leaning AP, not FNN.

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Excerpted from Associated Press: Fact Check Premiums would rise under Obama plan, Mar 16, 2010

Visiting a Cleveland suburb this week, the president described how individuals and small businesses will be able to buy coverage in a new kind of health insurance marketplace, gaining the same strength in numbers that federal employees have.

“You’ll be able to buy in, or a small business will be able to buy into this pool,” Obama said.

“And that will lower rates, it’s estimated, by up to 14 to 20 percent over what you’re currently getting. That’s money out of pocket.”

And that’s not all.

Obama asked his audience for a show of hands from people with employer-provided coverage, what most Americans have.

“Your employer, it’s estimated, would see premiums fall by as much as 3,000 percent,” said the president, “which means they could give you a raise.”

A White House press spokesman later said the president misspoke.

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Premiums are likely to keep going up even if the health care bill passes, experts say.

If cost controls work as advertised, annual increases would level off with time. But don’t look for a rollback.

Instead, the main reason premiums would be more affordable is that new government tax credits would help cover the cost for millions of people.

Listening to Obama pitch his plan, you might not realize that’s how it works.

“There’s no question premiums are still going to keep going up. There are pieces of reform that will hopefully keep them from going up as fast. But it would be miraculous if premiums actually went down relative to where they are today.”

The statistics Obama based his claims on come from two sources. In both cases, the caveats got left out.

An analysis by the Congressional Budget Office found that large employers would see premium savings of at most 3 percent compared with what their costs would have been without the legislation. That would be more like a few hundred dollars instead of several thousand.

The claim that people buying coverage individually would save 14 percent to 20 percent comes from the same budget office report. But the presidential sound bite fails to convey the full picture.

The budget office concluded that premiums for people buying their own coverage would go up by an average of 10 percent to 13 percent, compared with the levels they’d reach without the legislation. That’s mainly because policies in the individual insurance market would provide more comprehensive benefits than they do today.

The premium reduction of 14 percent to 20 percent that Obama cites would apply only to a portion of the people buying coverage on their own — those who decide they want to keep the skimpier kinds of policies available today. The president usually alludes to that distinction in his health care stump speech, saying the savings would accrue to those people who continue to buy “comparable” coverage to what they have today.

And, those costs would only go down if, in fact, swarms of currently healthy uninsured young people join the risk pool — reducing average payouts and spreading insurance company overhead costs.

Full article:
http://news.yahoo.com/s/ap/20100317/ap_on_bi_ge/us_health_overhaul_fact_check

This entry was posted on March 18, 2010 at 7:55 am and is filed under Health Care / Medical Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.