Judging Obamacare: A How-To Guide

A step-by-step list for separating facts from flacks.

Dueling protests have been a regular Washington feature throughout the Obamacare debate.
National Journal
Patrick Reis and Clara Ritger
Patrick Reis Clara Ritger
Aug. 26, 2013, 2 a.m.

It’s go­ing to be a mes­saging war for the ages.

When some of the Af­ford­able Care Act’s most crit­ic­al fea­tures go in­to ef­fect Oct. 1, so too will a massive struggle between the law’s ad­voc­ates and al­lies, as sup­port­ers at­tempt to con­vince Amer­ic­ans that the law is help­ing them af­ford their in­sur­ance, while crit­ics scramble to prove it’s send­ing in­sur­ance premi­ums sky­ward.

But as politi­cians pon­ti­fic­ate and flacks flack, health care ana­lysts are grow­ing ex­as­per­ated with a de­bate that is rap­idly filling with faulty lo­gic and fuzzy math.

“You can make those num­bers look like al­most any­thing you want,” said Car­oline Pear­son, vice pres­id­ent of the D.C.-based health care con­sult­ing firm Avalere Health. “It has been highly politi­cized top­ic.”

So, amid the spin, how should every­day Amer­ic­ans judge Obama­care’s suc­cess in con­trolling the cost of health in­sur­ance? Here’s step-by-step ad­vice from the ex­perts.

1. Don’t be­lieve the hype.

The Oc­to­ber kick­off will be fol­lowed by a flood of stud­ies and press re­leases, most of which will cherry-pick data while claim­ing to render a “fi­nal judg­ment” on wheth­er the law is mak­ing in­sur­ance more or less af­ford­able.

But those should all be taken with a ta­ble­spoon of salt, as no single piece of evid­ence — nor even any single study — can provide a defin­it­ive an­swer, Pear­son said.

“There’s not really a good way to an­swer the ques­tion. There’s no apples-to-apples com­par­is­on,” she said. “Is one product be­ing sold today to one group of people go­ing to be more or less ex­pens­ive than a totally dif­fer­ent product sold later to a totally dif­fer­ent group of people? There’s no way to com­pare those two in a way that would be deemed fair.”

Rather than bank­ing on a single study, un­der­stand­ing the law’s ef­fects on in­sur­ance costs will re­quire a sus­tained, broad look. And even then it will re­main a mat­ter of of on­go­ing con­ten­tion — as neither camp is show­ing any signs of giv­ing ground.

“I don’t think the pro­ponents will ever ad­mit it’s a fail­ure,” said Devon Her­rick, seni­or fel­low at the Na­tion­al Cen­ter for Policy Ana­lys­is.

2. For­get your arith­met­ic, re­mem­ber your cal­cu­lus.

Un­less there is a sud­den and shock­ing break from the long-term trend, health in­sur­ance premi­ums will con­tin­ue to rise after the law takes ef­fect — but that by it­self isn’t an in­dict­ment of the law.

In­stead of lower­ing costs ab­so­lutely, the law’s im­me­di­ate aim is to slow the rate at which they are in­creas­ing, mov­ing the rate closer to the rate of in­fla­tion. And it’s by that met­ric that the law’s in­sur­ance costs ef­fects should be judged, Pear­son said.

Mov­ing to­ward the pace of in­fla­tion would be a ma­jor im­prove­ment from the past dec­ade. Av­er­age premi­ums for fam­ily cov­er­age rose by 80 per­cent and single cov­er­age by 74 per­cent, ac­cord­ing to the Kais­er Fam­ily Found­a­tion’s sur­vey about em­ploy­er-sponsored in­sur­ance cov­er­age.

Al­though the rate of growth has slowed in re­cent years, premi­ums are up nearly 5 per­cent from last year for single cov­er­age and nearly 4 per­cent for fam­il­ies. The growth out­paces wage earn­ings and in­fla­tion, which rose 1.8 per­cent and 1.1 per­cent re­spect­ively.

3. Ditch the God com­plex.

Des­pite what the Belt­way crowd would have you be­lieve, Obama­care won’t be the only factor driv­ing in­sur­ance costs in the years to come. In many cases, it won’t even be the most im­port­ant one. In­stead, eco­nom­ics, demo­graph­ics, and tech­no­logy will of­ten be in the driver’s seat.

Take, for ex­ample, a Kais­er study re­leased last week that found that al­though premi­ums rose again in 2013, it was at a slower rate than was seen be­fore the pas­sage of the law. Obama­care back­ers were quick to cred­it the law, but the mod­er­a­tion in costs were at least par­tially driv­en by the Great Re­ces­sion, Her­rick said.

“As jobs be­came less stable, em­ploy­ers cut back on med­ic­al cov­er­age first,” he said. “As the eco­nomy im­proves, you’ll see people who oth­er­wise wouldn’t go to the doc­tor start­ing to use the sys­tem.”

Ad­di­tion­ally, med­ic­al tech­no­logy can also move the premi­um needle, Per­son said, not­ing that in­nov­at­ive new break­throughs can im­prove health res­ults while sim­ul­tan­eously in­creas­ing health costs.

And then there are the na­tion’s demo­graph­ics, which are propagat­ing a price bump that no law could in­ter­rupt: The baby boomers are get­ting old, mov­ing a mass gen­er­a­tion in­to the age range where more — and more-ex­pens­ive — med­ic­al care is needed.

4. Don’t ig­nore “It de­pends.”

Cov­er­age un­der Obama­care is not con­sist­ent. The up­front cost de­pends on which plan you se­lect — and how much you use health care will de­term­ine your total an­nu­al ex­pense.

The health in­sur­ance ex­change has four tiers: bronze, sil­ver, gold, and plat­in­um.

The bronze plan of­fers the low­est premi­ums but the least cov­er­age once a work­er reaches the de­duct­ible and in­sur­ance kicks in. On the bronze plan, the pro­vider cov­ers 60 per­cent of the cost of care and the work­er is re­spons­ible for 40 per­cent. This is, of course, after the work­er has paid full out-of-pock­et costs to reach the de­duct­ible.

So, if a work­er has a healthy and safe year, out-of-pock­et costs will re­main low. Com­bined with the bronze plan’s lower premi­um, this is the most eco­nom­ic­al choice for those us­ing Obama­care.

Sil­ver, gold, and plat­in­um plans raise premi­ums but also raise the level of re­spons­ib­il­ity for the pro­vider to 70, 80, and 90 per­cent re­spect­ively, of­fer­ing great­er pro­tec­tion in ex­pens­ive and un­fore­seen health emer­gen­cies.

In an ideal world, you’d be on the plat­in­um plan the year you broke your leg and on the bronze plan every oth­er nor­mal and healthy year, giv­ing you the most for your money. But the suc­cess of your in­sur­ance choice, like the suc­cess of Obama­care, is a gamble.

5. Re­mem­ber Olive Garden … then for­get about it.

Hor­ror stor­ies and tales of tri­umph have been reg­u­lar fea­tures of the Obama­care de­bate, and they will con­tin­ue to be go­ing for­ward.

Con­ser­vat­ives were crow­ing earli­er this year when res­taur­ant CEOs — in­clud­ing top brass at Olive Garden and Ap­ple­bees — said their chains would shed jobs and cut back hours be­cause of the law’s reg­u­la­tions. And the law’s back­ers have not hes­it­ated to do cherry pick­ing of their own, re­peatedly point­ing to hard-luck in­di­vidu­als who suffered un­der the old health care re­gime and are already bet­ter off un­der the new one.

But while such an­ec­dotes mat­ter tre­mend­ously to the people in­volved, they are — when taken alone — a ter­rible basis for eval­u­at­ing a na­tion­al law that is set to af­fect nearly every fa­cet of the Amer­ic­an eco­nomy.

Like nearly every oth­er law, the Af­ford­able Care Act will have its in­di­vidu­al win­ners and losers, but when it comes time for judg­ment, it’s the big­ger pic­ture that mat­ters.

6. Pa­tience, pa­tience, and more pa­tience.

Amer­ic­ans won’t get their an­swers on Obama­care any time soon, ex­perts say.

In­deed, the White House de­cided re­cently to wait a year to en­force em­ploy­ers’ man­date to provide their em­ploy­ees health in­sur­ance, and the ad­min­is­tra­tion has turned back the clock on a key con­sumer pro­tec­tion: out-of-pock­et ex­pense caps.

Even after the law is im­ple­men­ted, its fate will be far from settled. For ex­ample, the ef­fic­acy of the state in­sur­ance ex­changes — which Her­rick called the biggest de­term­in­ing factor in the law’s suc­cess — will be de­term­ined largely by how suc­cess­ful they are in per­suad­ing  people to en­roll, es­pe­cially young, healthy adults.

But while the law is still in its nas­cent stages, the doom­say­ers and cheer­lead­ers have not — and will not — wait to make their case.

“I think the chal­lenge is that people want to have something to weigh in on,” Pear­son said, “and noth­ing has star­ted yet.”

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