Thursday, July 18, 2013

The Obama Administration’s Fuzzy Premium Math

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Fix Health Care Policy - A weekly Update from the Health Care Initiative at The Heritage Foundation
The Obama Administration’s Fuzzy Premium Math

In his speech this morning, President Obama claimed that Obamacare is working to lower premiums. There’s only one problem with that claim: His math doesn’t add up.

Let’s look at the facts. In 2008, then-Senator Obama promised premiums would go down under his plan by $2,500 per family per year. But the non-partisan Congressional Budget Office estimated in 2009 that Obamacare would raise premiums on the individual health insurance market by $2,100 per family per year by 2016.

The Administration also released a report today with claims of lower premiums. The press previewed the report this morning, saying:

Costs for a middle-of-the-road insurance policy average roughly $321 per month across the 11 states that have released their rate filings for next year, administration officials said — compared with initial estimates of $392 per month.
 
There’s one big problem with that claim: Premiums won’t actually go down—the increases will just be lower than expected.  If premiums are $71 per month ($392 minus $321), or $852 per year, lower than CBO first estimated, that still leaves them nearly $1,250 higher than they would have been without Obamacare.  Remember: CBO said individual health insurance premiums would go up by $2,100 per family.  Even if premiums are going up by less than expected, they’re still going up—in violation of Obama’s 2008 campaign promise.
 

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