Wednesday, January 5, 2011

More Misinformation from the Administration

The Secretaries of Labor, HHS, and Treasury have released a joint letter to Congressional offices outlining the “benefits” of the health care law, as part of an attempt to build political support for the unpopular measure.  Several claims in the letter are however at variance with the facts, and warrant a response.

The most egregious claim in the letter is that Exchanges will “allow…individuals and small business owners to get insurance at rates comparable to those charged to large employers, reducing the premiums individuals face by 14 to 20 percent according to the Congressional Budget Office.”  That claim of lower premiums is patently FALSE.  In fact, the Congressional Budget Office found that the Senate bill would RAISE premiums by an average $2,100 per family.  The basis for the Secretaries’ allegation is that the Exchanges would reduce costs on their own; however, CBO also found that premiums would go up because individuals would be FORCED to buy richer policies.  Here’s the language from pages 9-10 of the CBO analysis:

Specifically, because of the greater actuarial value and broader scope of benefits that would be covered by new nongroup policies sold under the legislation, the average premium per person for those policies would be an estimated 27 percent to 30 percent higher than the average premium for nongroup policies under current law (with other factors held constant). The increase in actuarial value would push the average premium per person about 18 percent to 21 percent above its level under current law, before the increase in enrollees’ use of medical care resulting from lower cost sharing is considered; that induced increase, along with the greater scope of benefits, would account for the remainder of the overall difference.

In other words, the increased mandates in the bill – because Democrats and government bureaucrats believe that some Americans’ coverage is “insufficient” – would RAISE premiums.  In the same vein, it’s worth noting that page 4 of the letter celebrates as a “success” of the health law the fact that one insurer proposed a rate increase of “only” 9.8 percentWhat happened to the $2,500 reduction in premiums candidate Obama promised, such that an increase of “only” 9.8 percent is considered an accomplishment?

Other nuggets in the letter worth responding to:

  • Page 1 claims that the law is “improving the quality of care and lowering costs,” but in reality the Administration’s own actuary estimated that the bill will RAISE health costs by $310,800,000,000.
  • The letter’s second paragraph talks about the law “giving Americans more freedom in their health care choices,” but in reality the law gives Americans “freedom” by forcing them to buy a product for the first time ever – an unprecedented, and constitutionally dubious, mandate by the federal government on all Americans.
  • Page 5 of the letter claims that the law gives Medicare “improved financial solvency for an additional 12 years.”  In reality however, the Medicare actuary noted that the more than $500 billion in spending reductions “cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions under the PPACA) and to extend the [Medicare] trust fund, despite the appearance of this result from the respective accounting conventions.”  Medicare’s chief actuary also went so far as to encourage individuals to ignore the estimates included in the annual trustees report, and view an alternative scenario instead, because the official estimates included unrealistic savings provisions from the health care law that the actuary believes will never take effect.