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Jon Greenberg
By Jon Greenberg July 16, 2013

AFP ad says premiums will rise under Obamacare

The conservative organization that spent more than $33 million in the last election to defeat President Barack Obama and other Democrats has turned its sights to undermining support for the Affordable Care Act, otherwise known as Obamacare. The group, Americans for Prosperity, launched a television ad in Ohio and Florida.

The ad is called "Questions" and in it, Julie, a pregnant mother, talks about her concerns about Obamacare. With a backyard swing set in the background, Julie says:

Two years ago, my son Caleb began having seizures. The medical care he received meant the world to me. Now? I’m paying more attention.

And I have some questions about Obamacare.

If we can’t pick our own doctor, how do I know my family’s going to get the care they need?

And what am I getting in exchange for higher premiums and a smaller paycheck?

Can I really trust the folks in Washington with my family’s health care?

In this fact-check, we focus on Julie’s question, "What am I getting in exchange for higher premiums?" That line presents higher premiums as a certainty, effectively saying "premiums will rise." Whether that’s true in Julie’s case and anyone else’s depends on several key factors: age, income, and perhaps most important, how they get their insurance today.

PolitiFact is wary of broad claims on the future of premiums under the Affordable Care Act. When House minority leader, Nancy Pelosi, said everyone would pay less, we rated that False because some people would see higher rates.

The ad doesn’t tell us much about Julie except that she already has insurance. We asked Levi Russell, spokesman for Americans for Prosperity, whether her current insurance is through the large-group, small-group, or individual markets. We got no details. Russell said "Julie’s questions about the impact of Obamacare are universal, which is why we’ve chosen not to get into details on her particular insurance coverage."

That would be fine, but if Julie is the Every Woman then her conviction that her premiums will go up is a sweeping statement that needs to be put in the context of the different markets.

Cori Uccello, senior health fellow at the American Academy of Actuaries, said there are many factors that will shape how people like Julie fare under the Affordable Care Act. The best thing would be if she gets her insurance through a large employer.

"If they're in the large group market, they wouldn't pay more in premiums," Uccello said.

We contacted the Insurance Commission in Washington state. They run that state’s exchange, the online shopping tool for small-group and individual plans. Stephanie Marquis, a spokeswoman for the commission, said they will post their final rates in about two weeks. If Julie lives in Washington and is insured under a small-group plan, Marquis says she would do pretty well.

"It’s likely the rates will stay close to the same," Marquis said. "Our essential health benefits that all plans must include are based on benefits already included in most small employer plans. Also, guaranteed issue in the small employer market. People cannot be charged more today, if they’re sick."

Employers provide most of the insurance in this country. About 60 percent of everyone under 65 is covered through either a large-group or small-group plan, according to the Employee Benefits Research Institute, an independent think tank. Statistically, if Julie has insurance today, it’s most likely in one of those markets and the ad should not assume that her rates will rise.

About 22 percent of people under 65 are with a government program, either Medicaid or a children’s program, S-CHIP. The individual market represents the smallest slice of people with insurance, about 7 percent.

In citing support for the claim that premiums will go up, Russell focused on the individual market. He said rates in California will be 64 to 146 percent higher. We were unable to confirm that. Russell also pointed to a Wall Street Journal article. He said the article covered at length the prospect of "rising premiums for many Americans."

First, we note that in his response, Russell softened the claim in the ad, which assumed that premiums would go up without any qualification. Russell changed that to premiums going up for many people, not everyone.

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The WSJ looked only at the individual market. It used the proposals from insurance companies that want to participate in the exchanges of eight states.

The WSJ found that, "Healthy consumers could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year, while the premiums paid by sicker people are set to become more affordable."

This could be considered a split decision for the AFP ad. If Julie has a child with a medical history, and buys her insurance with no help from an employer, the article suggests she might do well under Obamacare. On the other hand, if she were young and with a very healthy family, she might pay more.

This article is one of the first to assess actual rates, as opposed to predicted rates -- studies that amount to informed guesswork. But while better, the analysis is using proposed not final numbers. Some states, such as Oregon, have seen companies lower their rates after they first submitted them. And other studies analyzed similar data but reached different conclusions.

The consulting group, Avalere Health, looked at proposed rates in nine states and saw middle range plans, so-called Silver tier, that had premiums lower than predicted by the Congressional Budget Office, the nonpartisan research arm of Congress. Costs varied widely, from $205 a month in Oregon to $413 in Vermont for a 40-year-old nonsmoker.

The state you live in has a significant effect on how the Affordable Care Act changes rates. In Washington state, Stephanie Marquis said her office was surprised with the numbers insurance companies put on the table.

"Several carriers predicted rate changes as high as 70 percent," Marquis said. "Yet that’s not what they filed. Many people will pay slightly more or the same for much better coverage."

When the Washington Insurance Commission compared those proposals with the rates a private insurance company changes today, it found people in their 20s were paying about $50 more each month, while people in their 40s and 60s were saving $22 to $268 a month.

Experts have always expected younger workers in the individual market to pay more. The Congressional Budget Office said the price tag for this sort of health insurance plan was likely to go up by 10 to 13 percent.

However, the CBO noted that a significant number of the people getting their insurance this way would have incomes low enough to qualify for tax credits that would lower the effective cost. The Kaiser Family Foundation estimated these tax credits would help about 80 percent of them, although even with that subsidy, many in this group would still see rate hikes.

The WSJ article did not take the tax credits into account.

Bob Laszewski, the CEO of the consulting firm Health Policy and Strategies Associate, is pessimistic on rates in the individual market.

"A family’s costs are much more likely to go up," Laszewski said. He said the insurance plans will be better than some offered today and that coupled with other changes will make plans more expensive. On the other hand, he could make no projection for Julie.

"We don't know anything for sure regarding any specific person. If this person lives in (New Jersey), they might just see their premiums go down," Laszewski said. Current law in New Jersey tends to push rates higher, making savings under Obamacare more likely.

For the most part, uncertainty dominates the picture. "It is premature to say who will see increases and who will see decreases," Cori Uccello with the American Academy of Actuaries said.

Our ruling

Americans for Prosperity produced an ad that claimed that health insurance premiums would go up under Obamacare. To make a universal statement, the group both wants us to accept certain details about a woman, Julie, and disregard others. Chief among these is how she gets her insurance today. Statistically, she is most likely to fall into groups that are likely to do well under Obamacare.

The most detailed supporting document focuses on the group that represents just 7 percent of today’s insurance market. The individual market is the one most likely to see rate hikes but the ACA provides tax credits to cushion the impact of those hikes.

While most states have yet to announce their final rates, every expert we spoke to agreed that some people will pay more.

The message a casual viewer would take from the ad is that everyone's rates are going up. But that's not true, based on what experts told us. The AFP ad cherry picks the facts and draws a conclusion beyond what the evidence supports, but it will prove accurate for some people.

We rate the statement Half True.

Our Sources

Americans for Prosperity, Questions, July 7,  2013

Open, Americans for Prosperity: Summary

The American Maverick, AFP mounts campaign to expose Obamacare, July 9, 2013

Washington Post, A new ad attacking ‘Obamacare’, July 9, 2013

Interview with Levi Russell, spokesman for Americans for Prosperity, July 12, 2013

Wall Street Journal, Health insurance costs set for a jolt, June 30, 2013

Email interview with Bob Laszewski, CEO Health Policy and Strategy Associates, July  12, 2013

PolitiFact, Nancy Pelosi says ‘everybody’ will get more and pay less under the health care law, July 1, 2012

Deloitte Center for Health Solutions, The impact of health reform on the individual insurance market, October 10, 2011

Employee Benefit Research Institute, Sources of Health Insurance, September 2011

Congressional Budget Office, "An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act," November 30, 2009

Avalere Health, Exchange premium analysis

Congressional Budget Office, Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act, March 13, 2012

Kaiser Family Foundation, Why Premiums Will Change for People Who Now Have Nongroup Insurance, February 6, 2013

American Academy of Actuaries, How will premiums change under the ACA?, May 2013

Interview with Cori Uccello, senior health fellow, American Academy of Actuaries, July 12, 2013

Email interview with Bob Moffit, senior fellow, Heritage Foundation, July 12, 2013

Email interview with Jonathan Gruber, professor of economics, Massachusetts Institute of Technology, July 11, 2013

Email interview with Stephanie Marquis, spokeswoman, Insurance Commission, State of Washington, July 15, 2013

Email interview with Joanne Peters, national press secretary for health care, U.S. Department of Health and Human Services, July 15, 2013

Governing Technology, Making Obamacare work: California’s encouraging start, June 14, 2013

Rep. Henry Waxman, D-Calif., Ranking member Henry Waxman releases new analysis of proposed ACA insurance rates, May 20, 2013

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