Thursday, December 18th, 2014

Ad Watch: Will Obamacare raise your health insurance premiums?

Americans for Prosperity is airing this anti-Obamacare ad in Virginia and other states.

Americans for Prosperity, a conservative group advocating small government, recently launched a national TV ad implying that Obamacare is raising the cost of health insurance.

"And what am I getting for higher premiums and a smaller paycheck?" a woman asks near the end of the 30-second spot, which is airing on cable TV in Virginia.

PolitiFact and other fact-checking services have taken many looks at the claim that Obamacare will cause premiums to soar. Let’s do a quick review of the facts.

There are three types of private-market health insurance. Large-group plans cover employees of companies with more than 50 workers. Small group plans work the same way, but with the company employing fewer than 50 people. In both, workers pay a portion of the premiums and employers support the rest. The third type of private insurance is in the nongroup market -- policies that people buy on their own, paying the entire cost themselves.

Large-group plans account for roughly 70 percent of private policies, with small-group plans accounting for about 13 percent and the nongroup market accounting for about 17 percent.

Obamacare is expected to affect each of these three types of policies differently. In 2010, the Congressional Budget Office estimated that by 2016, insurance premiums in the large-group market would either stay the same or drop by as much as 3 percent, while the small-group market would see anywhere from a drop of 2 percent to an increase of 1 percent. The biggest rises would be felt in the nongroup market, where premiums were projected to increase by between 10 percent and 13 percent.

But let’s remember that the nongroup market includes young adults who typically buy low-premium, high-deductible plans. Obamacare, starting next year, will require a threshold of coverage that that will exceed what now is typically purchased through the individual market. The CBO estimated 57 percent of the nongroup would be eligible for subsidies to help buy the coverage.

So far, the law has not resulted in lower premiums. In its first year of implementation, 2010 to 2011, premiums for employer-sponsored family plans increased 9 percent. But, as our friends at FactCheck.org explained, Obamacare was responsible for an increase of only 1 to 3 percent. Incidentally, the Kaiser Family Foundation reported an increase of 4 percent for employer-sponsored family plan premiums from 2011 to 2012, but did not break down how much of the hike was attributable to Obamacare.

Another consideration: In 2015 the U.S. will start enforcing a provision of Obamacare that requires companies with 50 or more full-time employees to offer health insurance or pay fines. There’s been much debate over how many companies will find it cheaper to drop insurance they now offer and pay the penalty of $2,000 per full-time worker, not counting the first 30.

The CBO has projected that employers will drop coverage for about 8 million people, or 3 percent, forcing them to buy coverage through exchanges. Premiums may increase for those people, but the government would subsidize some of that expense for households earning up to four times the poverty level, or $89,400 for a family of four.

So despite promises that the law would cut premiums -- and predictions to the contrary -- the law is very complicated and people with different types of coverage will likely see a range of outcomes.