Some are calling it “rate shock,” others “bait and switch” as well as “goosed” data. They’re all right. Let’s not forget that ObamaCare’s official name is “Patient Protection and Affordable Care Act.” But guess what? Forced coverage of high-risk patients, forced coverage of people with preexisting conditions, new massive regulations, increased paperwork, subsidies for several million new “customers”—these things cost lots of money. Anyone with a brain knew the truth from the start: this will be expensive, and someone is going to have to pay.
The money will have to come either in the form of more government debt, direct taxes, or increased premiums. It will probably come in the form of all three eventually, but for now we have a clear indicator of what ObamaCare will do to the market. As Forbes columnist Avik Roy notes, despite all the efforts to deny it up front, and all the efforts to continue to lie about it, California’s own ObamaCare exchange has just announced it will be “rate shock”:
Last week, the state of California claimed that its version of Obamacare’s health insurance exchange would actually reduce premiums. “These rates are way below the worst-case gloom-and-doom scenarios we have heard,” boasted Peter Lee, executive director of the California exchange. But the data that Lee released tells a different story: Obamacare, in fact, will increase individual-market premiums in California by as much as 146 percent.
Roy explains that the CA bureaucrats could maintain the lie because they were deceptively comparing what individual plan rates will be under ObamaCare to the current rates for employer-based plans which are highly regulated and thus more expensive. If, however, they had compared individual plans under ObamaCare with today’s private market individual plans—a more direct comparison—they would have had to report the drastic increases under ObamaCare.
Of course, as another article notes, ObamaCare was sold based on such lies from the beginning:
Let’s go back in time to when President Obama first began to make the case for his health care overhaul. Here’s how he touted his health plan in May 2007, early in his run for office. “If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less.” . . .
Obama didn’t stop pointing to lower premiums when he made it into the White House in 2009. In May of that year, he told C-SPAN that if health industry groups commit to savings—“we end up saving $2 trillion…a lot of those savings can go back into the pockets of American consumers in the form of lower premiums. That’s what we are driving for.”
From the very beginning, in other words, Obama’s message was not that the law would result in higher premiums, but better coverage. It was that the law would lower premiums, end of story.
Then, when one CA insurer noted in 2010 that its rates were going to increase 39 percent, Democrats denounced this as disproportionate and thus greedy profiteering. But this turned out of be another lie: the company actually suffered an 11 percent drop in earnings that year.
But what makes the ObamaCare propaganda even worse is that even if their lie was true, it turns out that “Affordable Care” is actually going to increase premiums far worse than even the alleged greedy profiteers it denounced. In some cases premiums will more than double.
It’s great that Covered California released this early the rates that insurers plan to charge on the exchange, as it gives us an early window into how the exchanges will work in a state that has an unusually competitive and inexpensive individual market for health insurance. But that’s the irony. The full rate report is subtitled “Making the Individual Market in California Affordable.” But Obamacare has actually doubled individual-market premiums in the Golden State.
How did Lee and his colleagues explain the sleight-of-hand they used to make it seem like they were bringing prices down, instead of up? “It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market,” Covered California explained in last week’s press release, “because in 2014, there will be new standard benefit designs under the Affordable Care Act.” That’s a polite way of saying that Obamacare’s mandates and regulations will drive up the cost of premiums in the individual market for health insurance.
The question is whether this will be only a lament and complaint, or whether proponents of truly free-market healthcare will be able to get some traction out of it. There is no doubt there is a massive problem here: a massive lie being used to paper over a massive transfer of wealth. Relevant questions will be:
1) How many people will be directly affected by this massive increase in cost?
2) Who do these people feel about the increase?
3) How do they vote?
If there are enough people directly affected, and if they are affected enough to change voting psychology, this could be enough to offset the powerful “helping the poor and suffering uninsured” argument that would keep socialized healthcare in place.
While this may be a bit premature, this issue could in fact create a window for opponents of socialized healthcare to undermine and even possibly repeal it. That this is being raised in a state as liberal as California could be an even bigger boost to those forces. Could it flip the state’s color in an election?
The biggest danger to such a move will be those establishment figures who use this problem as an excuse to call for even more government involvement, in this case fixing rates downward. That will be a step toward more fully socialized health care. And it will be something to watch for coming from both establishment Democrats and Republicans alike.