The Selling of Obamacare

It’s as though two completely separate conversations have been going on. From day one, the health policy community has correctly seen the Affordable Care Act as an attempt to completely change the health care system. This isn’t even controversial. It’s accepted by all as an undisputed fact.

However, no one has ever said this to the American people. In fact, the message of the Obama presidency—qqqgoing all the way back to the 2008 campaign—qqqwas just the opposite. In that election, Barack Obama rejected Hillary Clinton’s call for an individual mandate (a proposal that would obviously affect everyone) in favor of his own proposal, which appeared to mainly help those who couldn’t afford insurance. And how many people would that be?  You could be forgiven if you thought it was about 10% of the population.

Then, on the eve of the passage of the ACA, virtually every Democrat who appeared on TV to defend it had one and only one message to offer: people were being discriminated because of pre-existing conditions. And how many of those people are there? Well for the first three years under the law, anyone denied insurance because of a pre-existing condition was able to enter the new (Obamacare) risk pools and pay the same premium a healthy person would pay. How many did that? About 107,000. That’s out of a U.S. population of approximately 314 million!

To allay concerns about Obamacare’s individual mandate, the president repeatedly promised that “if you like your health insurance plan you can keep your health insurance plan” and “If you like your doctor you can keep your doctor.” Over and over again the message was the same: most people will be completely unaffected by the new health law.

Then over the past week or so, the general public woke up to some stunning revelations. It now appears that as many as 10 million people will lose their individual health insurance policies as of January 1. To put this number in perspective, the administration’s goal for next year is to sign up 7 million people. We could actually end 2014 with more people uninsured than there were at the end of 2013.

On top of that, The Washington Post has just awarded the president Four Pinocchios for his statements. Although it took them five years to do so, when they finally got around to it the write up was devastating. “Four Pinocchios” is a nice way of saying that the president has been lying all along. [Or, is it possible the president didn’t know? More on that below.]

So why has it taken so long for the mainstream media and the general public to wake up to what is going on? I think there are three reasons: (a) insurance industry executives (who knew what was going on) were threatened and bullied into silence by the Obama administration, (b) the health policy community (who also knew what was going on) abandoned their role as critical analysts and assumed the role of cheerleaders for the new law instead, and (c) the health care media (who should have known what was going on) didn’t do its job.

Before going forward, let’s put to rest a claim now being made by President Obama and Valarie Jarrett: that the insurance cancellations are the fault of the insurance companies, not the administration. It was the administration (through its own regulations) that made it virtually impossible for most individually owned insurance to be grandfathered. As The Washington Post explains:

The law did allow “grandfathered” plans—qqqfor people who had obtained their insurance before the law was signed on March 23, 2010—qqqto escape this requirement and some other aspects of the law. But the regulations written by HHS while implementing the law set some tough guidelines, so that if an insurance company makes changes to a plan’s benefits or how much members pay through premiums, co-pays or deductibles, then a person’s plan likely loses that status.

If you dig into the regulations (go to page 34560), you will see that HHS wrote them extremely tight. One provision says that if co-payment increases by more than $5, plus medical cost of inflation, then the plan can no longer be grandfathered. (With last year’s inflation rate of 4 percent, that means the co-pay could not increase by more than $5.20.) Another provision says the co-insurance rate could not be increased at all above the level it was on March 23, 2010.

Even before these regulation were promulgated, no serious policy analyst ever thought that more than a handful of plans would be grandfathered for very long—qqqnot the Congressional Budget Office, not the health committees on Capitol Hill, not the specialists in the private sector, not anyone. But with Obama’s repeated assurances that no one had anything to worry about, with a compliant health care media and with a cheerleading health policy community, the general public has remained completely in the dark—qqquntil now.

As for premiums, every analyst knows that if you replace a market in which there is individual underwriting with community rating, premiums will go up for the vast majority of policy holders so that they can go down for the most expensive enrollees. As Megan McArdle explains:

It’s absolutely true that every policy wonk who was writing or speaking about the law in 2009 and 2010 understood that it would mean premiums going up for at least some people, many of whom would lose insurance that they would have preferred to keep…They had to; mathematically, it was not possible for coverage to expand and everyone’s premiums to go down—qqqnot unless you spent more in premium subsidies than the government could afford.

Everyone knew this—qqqexcept ordinary folks. They received the opposite message. Going all the way back to the 2008 campaign, candidate Obama told everyone their premiums would actually go down! See this Q & A from the 2008 Obama campaign (Another HT: to Megan).

And again, why wasn’t this general impression corrected? For the three reasons I’ve already mentioned. But note: our friends at The Incidental Economist were critical of many of the president’s statements—qqqa welcome exception to the trend.

As for the president himself, he is a complete enigma to me. I’ve never felt that I understood him. He appears to have looked directly into the TV camera and said something that was blatantly untrue (in the words of Joe Scarborough) “over and over and over and over again.” You have to go all the way back to Richard Nixon to find something comparable.

Or is it possible the president really didn’t know? He often appears very detached and he spends a lot of time on the golf course—qqqeven when critical issues are pending.

I report. You decide.

[Cross-posted at Psychology Today and John Goodman’s Health Policy Blog]