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September 25, 2013

Yet Another Misleading Presidential Pitch for Obamacare

By

President Obama and former President Bill Clinton yesterday tried to persuade Americans, particularly young adults, to enroll in Obamacare’s government exchanges. Again. As before, they focused on the so-called “popular provisions” and insisted that the health care law will somehow make coverage more affordable. But yet again there is more to the story.

President Obama made a variety of overly optimistic claims about what consumers can expect to pay for coverage acquired through the exchanges when open enrollment begins next week. Indeed, he asserted, coverage under Obamacare will be so affordable, it will cost less than your monthly cell phone bill.

He prominently touted big premium reductions in New York, California, and Illinois. But, as Avik Roy has pointed out (here and here), highlighting those states is suspect.

Contrary to the president’s bold claims, just hours after his remarks, the Department of Health and Human Services released a report on premiums in the exchanges of certain states that told a different story. While the report lacked critical information about what specific plans will cost specific individuals in the exchanges, it did show that the average state exchange consumer will face coverage costs far greater than their cell phone bills.

The administration’s report focused on plans with the lowest premiums. Still, it showed that, “In 15 states, the second lowest cost silver plan will be less than $300 per month.” And for young adults, “The weighted average lowest monthly premiums for a 27-year-old in 36 states will be (before tax credits): $129 for a catastrophic plan, $163 for a bronze plan, and $203 for a silver plan.”

As both President Clinton and President Obama emphasized, the success of Obamacare’s exchanges depends heavily on enrolling young, healthy people. And at these prices, even with a tax credit, Obamacare might be a hard sell for that audience. Many might simply opt to pay the much less expensive individual mandate ($95 a year or 1 percent of their annual income next year), rather than buy such expensive coverage. If they opt out, premiums in Obamacare’s exchanges would be even higher for everyone else.

Open enrollment begins in less than a week, and rational consumers will make rational choices about whether or not they can afford Obamacare. As the president said, “Rather than try to disabuse people of every single bit of misinformation that’s been out there, what we’re saying is, just look for yourself.”

Unfortunately, that suggestion may come back to haunt the president as have all the other broken promises of Obamacare.

- Nina Owcharenko is director of The Heritage Foundation’s Center for Health Policy Studies.

Originally appeared in National Review Online.

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