If you want to know why we can’t have an honest debate about Obamacare, all you have to do is pay attention to some recent news from California—and the way a highly distorted version of it, by one irresponsible writer, has rippled through the conservative press.
The news was about California’s version of the Obamacare exchange. Exchanges are the virtual marketplaces where people without employer insurance will buy coverage. A big question is what options will be available, and at what prices. Insurers submitted their bids a few weeks ago and the states have started making those bids public. Those of us who follow health policy were waiting to see what happened in California—partly because it’s so large, and partly because it has not traditionally regulated insurers very closely.
That last part is really important. Under Obamacare, premiums for some people are bound to go up, because the law requires insurers to cover people they presently turn away for pre-existing conditions—and to provide the kind of comprehensive benefits insurers frequently don’t offer when selling to people on an individual basis. But how high will those premiums go? The answer does not affect the majority of people directly. The law’s subsidies limit what most will pay for coverage, no matter how high the premiums go. But it affects the behavior of people with household incomes of more than four times the poverty line. And if the premiums come in much higher than expected, the subsidies would get a lot bigger, putting a greater strain on the federal treasury.
Many of us were prepared for the worst, thanks mostly to ominous warnings from insurance industry executives and some projections from acturial firms. But on May 24, Peter Lee, executive director of California’s exchange, announced that the bids had actually come in lower than expected. Lee was careful to point out that premiums would vary considerably depending on individual circumstances—and that some people would end up paying more than they do today. But lots of people would benefit from subsidies, making insurance cheaper—in some cases, a lot cheaper. And even those paying more, Lee noted, would be getting a good deal: Insurance without the notorious gaps of today’s plans, at a price that was comparable to or even better than equivalent coverage available today from employers.
Writers like me who have supported the law treated this a big deal. But I would like to think we were candid about the downsides, even as we highlighted the upsides. Paul Krugman, Kevin Drum, Matthew Yglesias, and I all noted that California was just one state—and, in some respects, a best-case scenario, because its officials are committed to the law’s success and enjoy broad support from corporate, medical, and consumer leaders. We also noted—as we had noted before—that some young and healthy people would have to pay more. Again, a health insurance system that no longer discriminates against the old and sick can no longer discriminate in favor of the young and healthy. We also acknowledged that getting the insurance bids is just one step in the process. As many of us have written, plenty of things could go wrong with Obamacare—and at least a few of them surely will.
The initial response on the right was silence—until late last week, when Avik Roy, a columnist from Forbes, decided to try an experiment. He went to eHealthInsurance, the clearinghouse website for people who try to buy individual coverage today, and used two fictional people to obtain insurance offers for a 25-year-old healthy man and a 40-year-old healthy man. He then compared the offers eHealthInsurance produced to the bids the California exchange had provided. The eHealthInsurance premiums were substantially less—and, from this, Roy concluded that California would experience precisely the kind of “rate shock” he and other Obamacare critics had predicted. "Obamacare itself more than doubles the cost of insurance on the individual market," Roy wrote. "I can understand why Democrats in California would want to mislead the public on this point. But journalists have a professional responsibility to check out the facts for themselves." Within a day or so, every right-wing outlet had picked up Roy’s calculation—for a while, it was the lead item on Drudge. The Daily Caller’s headline was typical: “Obamacare drives up insurance premiums by up to 146 percent in California.”
If you’ve ever tried to buy insurance on your own, you have a pretty good idea of how ridiculous Roy’s experiment was. If not, go and read Ezra Klein and Rick Ungar, who over the weekend pointed out each of the many flaws. Among the problems they identified: The prices a consumer sees on eHealthInsurance are classic “teaser rates”—in this case, available only to people who don’t have pre-existing conditions. A 25-year-old with a history of allergies, or diabetes, or repetitive stress injuries, or mental health problems, or any number of other common conditions could not have gotten that rate. In fact, that 25-year-old might not have been able to get insurance at all. “That’s not just comparing apples to oranges,” Ezra wrote. “It’s comparing apples to oranges that the fruit guy may not even let you buy.”
And it’s even worse than that. Insurance bids from eHealthInsurance are for new customers only. Insurers who sell to individuals—that is, insurers who sell in the “non-group market”—frequently raise rates dramatically, and unpredictably, because a particular group of customers have become too expensive to insure. In other words, if you buy on eHealthInsurance, you might get a reasonable rate the first year, only to experience eye-popping increases a year or two later. That won’t happen on the exchanges, because, under Obamacare, insurers can’t charge different prices to new and existing customers.
But the most amazing part of Roy’s entry was what it didn’t say. Roy never acknowledged that, even as young and healthy people would have to face higher premiums, older and sicker people would face lower premiums. He said absolutely nothing—not a single word!—about the federal subsidies available to people with incomes below 400 percent of the poverty line. (That's about $46,000 a year for a single adult, or $94,000 for a family of four.) This has been a pattern with his writing and, unfortunately, much of what I read on the right. Articles focus on the drawbacks of Obamacare but almost never acknolwedge the benefits.
Eventually, in response to criticism I made on Twitter, Roy added a postscript about the subsidies. And in a follow-up that Roy posted on Monday morning, he acknowledged them again—although only late in the piece, and in a highly misleading way. He wrote that only a “select few” will get the discounted prices, a point he's made over and over again. Actually, the majority of people buying coverage on the exchanges will get subsidies. It's difficult to be certain about the overall effect on all Californians buying coverage, because it requires insurer information not available to the public. But it's entirely possible (I'd say likely) that, with the subsidies, the majority of people buying on the exchange next year will pay less than they pay for insurance today.
Roy is no dummy. He’s well aware of these facts. He could have acknowledged them, and went on to make the case that the benefits are not worth those costs—that it’s fundamentally unfair to ask young, healthy, affluent people to pay more, or that Obamacare’s whole scheme is just so inefficient as to make it worse than the alternative.1 As Aaron Carroll wrote the other day, Obamacare involves real trade-offs: Higher-income people have to pay higher taxes, the health care industry has to endure lower payments from Medicare, and—yes—some young, healthy, affluent people have to pay more for private insurance. Those of us who support the law believe that's a worthwhile price to pay to help achieve universal coverage, given the lack of politically viable alternatives. Roy disagrees, I know, and he could have made that argument in a nuanced way last week.
But Roy didn’t do that. And while all of us are susceptible to hyperbole or selective intepretation from time to time, Roy's column was something else entirely. He plucked out two examples of people who would pay more in California, pretended they were emblematic of the system as a whole, then accused other writers of being irresponsible. His argument hasn't held up well to scrutiny, but it's part of the political conversation and, I'm sure, will remain so for a while.
In his follow-up post today, Roy says “we’re finally having the intellectually honest argument about Obamacare that we should have been having all along.” If only that were true.