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If the rollout of the Obamacare website had gone well, we likely would be closer to having an answer to the all-important question: How much are people paying for health insurance and is it more than they did before? But for now, getting reliable answers can be treacherous.
Conservative talk radio and Fox News Channel host Sean Hannity waded into the discussion on his radio program. A caller voiced frustration with the lack of jobs. Here’s the conversation that followed:
Hannity: You know what the biggest job killer in the country is right now? Obamacare.
Caller: One thing that can't be argued is that insurance premiums are too high.
Hannity: They are skyrocketing. They are skyrocketing. I mean, in 45 out of 50 states, on average men are seeing their premiums double, going up 99 percent. Women up 62 percent. That's the average.
Are Hannity's numbers right?
Hannity’s staff told us the numbers came from an article in Forbes that provided the analysis of some number crunching by the Manhattan Institute for Policy Research, a conservative New York think tank.
But Hannity's on-air statement went further than the report itself and included a common mistake. He lumped in people who purchase insurance on their own with people who receive it through their employer.
The study focused explicitly on the insurance rates people can expect to encounter in the online marketplaces, which makes up less than 10 percent of the total private insurance market. Of that small subgroup, Hannity also failed to acknowledge that federal government subsidies will reduce many people’s out-of-pocket expenses, at least partially offsetting higher premiums.
The Manhattan Institute study
The Manhattan Institute analysts went through a complex process to estimate how premiums under Obamacare compared to premiums before the marketplaces opened. It drilled down to the county level in all 50 states and used a federal government website to gather health insurance prices in 2013 (before the Obamacare rollout). It looked at rates for 27-, 40-, and 64-year-old male and female non-smokers and adjusted prices upward to account for anyone who was denied coverage or had some health problem that would increase their rates.
Then, the researchers looked at the prices for plans in the marketplaces for comparable individuals. The results were daunting.
"The cheapest exchange plan for the average enrollee, compared to what a 40-year-old would pay today, will cost an average of 99 percent more for men, and 62 percent for women," the study said.
The Manhattan Institute analysis refers only to people buying insurance through the marketplaces, which is called the "individual market." This is in contrast to the way that most Americans, about two-thirds, get insurance. They get coverage through their employer. The number of people in the individual market is expected to grow under the new health care law but right now, they represent less than 10 percent of people with insurance.
We should note that the Manhattan Institute analysis relies on knowing how much people pay for insurance today, before Obamacare. That is something that a leading health policy research center has declined to do.
The Kaiser Family Foundation’s Larry Levitt said there are several reasons not to compare cost before and after Obamacare. Part of the challenge is the new health care law requires that insurance plans include more services than many do today, such as maternity care and mental health coverage. That means the plans people will buy in 2014 are not the same as the ones they bought in 2013.
And because the coverage is changing, apples-to-apples comparisons are challenging.
Levitt said another major obstacle to before-and-after comparisons is that reliable data is unavailable. Insurance companies would have a key piece, but they keep it to themselves.
"There is not good information about what people pay in the individual insurance market today," Levitt said. "And we certainly don’t know what types of plans people are going to choose after reform.
Generally, Kaiser has predicted that premiums will be "somewhat higher" in the individual market than what they are today. The additional services come at a price. In addition, no one can be denied due to a pre-existing condition. Insuring them will tend to increase an insurance plan's costs. That might be offset if plenty of younger, healthy people also join the insurance pool, a stated goal of Obamacare but also one of the great unknowns.
The Congressional Budget Office, the research arm of Congress, projects that about half the people buying health insurance through the marketplaces will be eligible for subsidies in the form of tax credits. The more money you make, the less the subsidy. No subsidies are available for an individual making more than $43,000 a year, or a family of four making about $92,000 a year. The Manhattan Institute average rate increases for men and women did not factor in any subsidies.
Hannity said premiums are skyrocketing and the average man would pay twice as much, while the increase for the average woman would be 62 percent. That claim relies on a study that focused on the individual marketplaces for insurance set up under Obamacare, a subset of people who purchase insurance. Regardless of the accuracy of the analysis, it spoke to the experience of a small minority of Americans, and it did not factor in the subsidies that will cushion some people from increased premiums.
Hannity overreached in his remarks on radio.
That said, new rules for insurance plans will tend to push some rates up -- because the plans must provide better coverage. But by how much depends on a host of factors that several leading health policy experts say is too difficult to estimate.
We rate this claim Mostly False.
Sean Hannity, WBAP AM Radio, Oct. 21, 2013
Email interview, Lynda McLaughlin, Hannity radio staff, Oct. 21, 2013
Manhattan Institute for Policy Research , Obamacare: Know your rates
Heritage Foundation, How Will You Fare in the Obamacare Exchanges?, Oct. 16, 2013
Email interview, Avik Roy, senior fellow, Manhattan Institute for Policy Research, Oct. 23, 2013
Avalere Health, Analysis on health plan offerings on the federally facilitated marketplace, Oct. 3, 2013
Bloomberg Government, Exchange competition cuts health insurance costs, Oct. 8, 2013
Kaiser Family Foundation / Health Research & Educational Trust, 2013 Employer Health Benefits Survey
Kaiser Family Foundation, Understanding insurance premiums under the Affordable Care Act, Sept. 10, 2013
Congressional Budget Office, "An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act," November 30, 2009
Kaiser Family Foundation, Why Premiums Will Change for People Who Now Have Nongroup Insurance, Feb. 6, 2013
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