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In a web video tied to the two-year-anniversary of the enactment of President Barack Obama’s health care law, the Senate Republican Conference accused Obama of breaking a promise because the health law increases premiums.
This portion of the video begins with screen text that says, "Promise 3." It cuts to a clip of Obama speaking on March 14, 2008, saying, "We're going to work with your employer to lower your premiums by $2,500 per family per year."
When the Obama clip ends, the following text appears on the screen: "Reality: The president's health care plan raises premiums in the individual market by $2,100 per family."
We wondered if the charge was accurate.
The Senate Republican Conference didn't provide information to support the claim by our deadline.
The video’s claim is similar to a claim we looked at in December 2009. Back then, we checked the claim by Rep. Mike Pence, R-Ind. Pence said that under the Democratic health plan -- which was then in the final stages leading up to passage -- families "will be forced to spend an additional $2,100 a year to keep their current health care."
As we noted then, the figure comes from a Nov. 30, 2009, analysis by the Congressional Budget Office, the nonpartisan number-crunching arm of Congress.
The CBO's analysis of how the law would affect premiums was broken into three categories, based on expectations for the year 2016:
• Those in the small group market, or people who work for businesses with up to 50 employees and receive employer-provided coverage. This category would make up about 13 percent of the total insurance market by 2016, CBO found.
• Those in the large group market, which would account for about 70 percent of the insurance market.
• Those in the non-group (or "individual") market, who purchase insurance as individuals. This group is expected to grow to about 17 percent of the insurance market. Today, these individuals purchase plans on their own, but most purchases made after the health care law is fully in place in 2014 would be made through the newly created insurance "exchanges" -- virtual marketplaces where Americans without employer-sponsored coverage can browse through insurance offerings and choose which plan to buy.
According to the report, the CBO estimates that the average premium per person in new individual policies would be about 10 percent to 13 percent higher in 2016 than the average premium for individual coverage under current law.
Specifically, the average premiums per policy in the non-employer-provided market in 2016 would be roughly $5,800 for single policies (up from $5,500 under current law) and $15,200 for family policies (up from $13,100 under current law).
The latter comparison, for families, is the source of the Senate Republican Conference’s number (and Pence’s) -- $2,100.
So the web video is correct that for families with non-group coverage, premiums could rise by $2,100.
But the video also leaves out some important context.
It ignores subsidies that many purchasers will receive. The CBO report notes that the majority of non-group enrollees -- about 57 percent -- would receive federal insurance subsidies, which on average would cover about two-thirds of the total premium.
It ignores improvements in the plan for beneficiaries. Much of the coverage purchased on the individual market prior to the law included high deductibles and restrictions. But the plans to be sold on the exchanges will be required to offer a minimum benefit package that should, in most cases, be superior what was offered in policies sold before the law took effect.
So while the new coverage may cost more, beneficiaries will get more insurance for their money and should see their out-of-pocket medical costs go down. According to the CBO report, an "apples to apples" comparison of the average price of equivalent insurance under the Democrats' plan would translate to an average premium about 7 to 10 percent lower than under current law.
Using the individual market as the standard is cherry picking. The other two categories -- the small group and large-group markets -- are entirely ignored by the video, even though the vast majority of people -- 83 percent -- get private health care insurance that way.
And the impact of the law on premiums for these groups is far lower than for the individual market. CBO projected that small-group premiums would jump just $100 by 2016, while large-group premiums would jump by just $200. Neither figure is as eye-popping as the $2,100 figure cited in the video.
Put it all together and what the CBO actually projected is that the vast majority of families with private insurance would see little change in premiums -- some because they’ll have employer-sponsored insurance that won’t experience big premium hikes, and some because they’ll have federally subsidized coverage in the individual market.
The families at risk of having to pay $1,200 in extra premiums would be those who have individual market insurance in 2016 but no subsidies -- about 7 percent of all Americans who have either individual or employer-sponsored insurance.
Using statistics for the individual market is a non-sequitur. The video airs a clip of Obama promising to "work with your employer to lower your premiums by $2,500 per family per year." As we recently noted, we’ve given Obama a rating of Stalled for his promise to lower employer-provided family premiums by $2,500, so noting that failure is a legitimate point.
But video goes on to note that Obama law "raises premiums in the individual market by $2,100 per family." The individual market is the only type of private insurance where the employer plays no role.
The Senate Republican Conference video claimed that while Obama promised to "work with your employer to lower your premiums by $2,500 per family per year," his health care law "raises premiums in the individual market by $2,100 per family."
The number does come from a Congressional Budget Office analysis, and it’s phrased accurately. But it’s stripped of crucial context and distorts the truth. It ignores subsidies that would ease the financial burden for a majority of those seeing premium increases; it ignores that the additional premium dollars will pay for more generous benefits; and it ignores that the vast majority of Americans with private insurance will pay no more than $200 extra for their premiums due to the law -- and possibly less than that. We rate the statement Mostly False.
Senate Republican Conference, "Obamacare: Broken Promises," Mar. 22, 2012
Congressional Budget Office, "An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act," Nov. 30, 2009
PolitiFact, "Rep. Mike Pence says Democratic health plan would drive up family premiums," Dec. 1, 2009
PolitiFact, "RNC ad blames Obama for $1,300 spike in family health care premiums," March 20, 2012
Email interview with Jonathan Oberlander, health policy professor at the University of North Carolina School of Medicine, Mar. 26, 2012
Email interview with Jonathan Gruber, economist at the Massachusetts Institute of Technology, Mar. 26, 2012
Email interview with Henry Aaron, senior fellow with the Brookings Institution, Mar. 26, 2012
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