Could Obamacare win 'Lie of the Year' two times in a row?

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Article Highlights

  • It is becoming increasingly clear that premiums are not dropping by $2500 per year per household

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  • CMS actuary: 65 percent of small businesses will see their health-insurance premiums increase

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  • ACA mandates that insurance policies meet new requirements — when you mandate stuff, prices go up

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In December, President Obama’s claim that “if you like your health care plan, you can keep it” was named the 2013 Lie of the Year by Politifact. This came shortly after even the barely accessible exchange websites made it clear that for many people, their old plans were no longer available due to the new regulatory environment imposed by Obamacare.

Now fast forward a few months to the glorious new year of 2014, and let’s see what has become of the president’s other central claim in the debate over health care reform: that it would “bring down premiums by $2,500 for the typical family.” (Here’s a compilation of the president making this claim over and over again before his law was enacted.)

Has that claim materialized now that the parts of the law the president decided not to delay for partisan political purposes are in full effect? Was it a reasonable claim to make at the time? Let’s have a look at the evidence.

The initial anecdotal evidence reported on for individuals signing up for new Obama-approved policies certainly did not suggest that premiums went down across the board, but that may just have been the result of a mix of stark disappointment for the few, and an unwarranted focus on the victimized as opposed to those reaping the benefits of reform.

Fortunately for our present purposes, as time goes by, more generally applicable numbers are surfacing. While it remains hard to paint a broadly representative picture of national premium, it is becoming increasingly clear that premiums are, indeed, not going down by $2500 per year per household. Just this past week, a report by the Centers for Medicare and Medicaid Services Office of the Actuary found that 65 percent of small businesses will see their health-insurance premiums increase due to a set of provisions implemented under the Affordable Care Act. Meanwhile, about 1 in 5 Americans who signed up for health plans through the exchanges appears to have found that they could not actually afford the premiums charged. Even Paul Krugman has now started writing columns arguing that premium hikes are limited, and if they are going up by a lot, then only for people he doesn’t view as sympathetic.

All this is not surprising, given that the ACA mandates that insurance policies meet a variety of new requirements—and when you mandate stuff, prices go up. But is it possible that the president and his fellow Democrats just didn’t know, and are only now learning about this from the news?

It seems unlikely. In November 2009, before the Affordable Care Act was enacted, Democratic Senator Evan Bayh from Indiana requested that the Congressional Budget Office look into this question. The CBO did precisely that, and found that premiums were likely to increase—the precise opposite of what the president had been promising. More precisely, the CBO predicted premium increases, by 2016, of 10 to 13 percent in the individual market, with negligible differences in the small- and large-group markets. In the nongroup market, that’s an increase of some $2,100 per family. I guess one could say that the president got the number almost right, just not the sign in front of it.

Now most people who buy health insurance are covered through large-group plans (you know, large groups are large so they add up quickly). One could therefore argue that the expectation, back in 2009, was that the typical family should expect to see similar premiums in once Obamacare was in full effect. But even that is an entirely different story from the one told so often by the president: that they could expect to see their premiums go down by $2,500.

When people started to receive cancellation notices in October, one line of defense the administration attempted to use was that only a small group of people—millions of people, but that’s nothing if you’re busy immanentizing the eschaton—was affected by the president’s claim that “if you like your plan, you can keep it.” That is certainly not the case here. The typical family is affected here, and with them tens of millions of Americans. That’s a lot of people, and that should make the claim that Obamacare would “bring down premiums by $2,500 for the typical family” a strong contender for 2014 Lie of the Year.

Stan Veuger is a resident scholar at AEI. His academic research focuses on political economy and applied microeconomics.

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