Did health insurance premiums jump 50 percent because of Obamacare?

 "Lamar was proven right"

–voiceover of new campaign ad for Sen. Lamar Alexander (R-Tenn.)

This campaign ad highlights Alexander's role as one of the chief GOP critics of President Obama's health-care law during a nationally televised "health-care summit" held on Feb. 25, 2010.

The ad shows Alexander debating the president over whether the Congressional Budget Office predicted a rise in premiums because of the Senate version of the bill.  Then the ad asserts that individual premiums have gone up more than 50 percent, citing 2010 and 2013 data from the Kaiser Family Foundation and the Department of Health and Human Services. It ends with the image of a quote from a Fox New reporter from the day of the summit, "Lamar Alexander was right," but the voiceover slightly tweaks the quote to say: "Lamar was proven right."

The Facts

First, let's revisit that exchange between Alexander and the president, as shown in the ad. (The material in brackets was clipped from the ad.)

Obama: "Lamar, when you mentioned earlier that premiums will go up, that's just not the case [according to the Congressional Budget Office]."

Alexander: "The Congressional Budget Office report says that premiums will rise [in the individual market as a result of the Senate bill]."

Obama: "No, no, no, no. This is an example of where we've got to get our facts straight."

Alexander: "That's my point."

Obama and Alexander were talking past each other. Alexander was citing an overall CBO figure that included the cost of the additional coverage mandated by the law, for an increase of 10 to 13 percent. Obama was focusing on CBO's prediction that the same exact insurance would cost less, saying at one point that "the costs for families for the same type of coverage that they're currently receiving would go down 14 percent to 20 percent." 

One could certainly say Obama's language was overly parsed, since it might have left viewers with the impression that premiums would go down as a result of the law. As we have often said, you don't get something for nothing–and that would include the robust package of benefits in Obamacare.

Regular readers may recall that we have explored this CBO estimate before, when we gave Two Pinocchios to then-Secretary of Health and Human Services Kathleen Sebelius for saying that premiums were 16 percent lower than what CBO had projected. (The problem was HHS had reinterpreted CBO's analysis without fully disclosing that fact.) The CBO analysis, which was never updated, presented average expected costs in 2016 for a family of four with two adults and two children.

We had previously noted that the most important part of the CBO report was not the dollar figures but the potential positive and negative impact of the law on premiums. The report did indicate that premiums, on average, were expected to increase because of mandates in the law. But it also showed that, as Obama noted, that all things being equal, the same level of insurance would cost less.

It was one of those reports with something for everyone–and news coverage of the CBO analysis led to a profusion of conflicting headlines. The Washington Post said: "Senate health bill wouldn't increase insurance costs for most, CBO says." By contrast, The Hill newspaper reported: "CBO: Senate bill would increase individual insurance premiums."

In any case, how does Alexander come up with the statistic that premiums have gone up 50 percent? He takes a 2010 Kaiser Family Foundation estimate that the average individual monthly premium was $215, and then compares it to an estimate for the second lowest "silver plan" released by HHS in 2013 as the exchanges were launched–$328 a month. (Alexander focused on the second lowest silver plan because the administration labeled it the "benchmark plan.")

That's an increase of 53 percent, but it's fuzzy math.

First of all, let's recall that insurance premiums have gone up every year–sometimes by double digit amounts. One cannot just assign every increase to the Affordable Care Act. Here's a useful chart of Kaiser data on insurance premium increases put together by our colleagues at FactCheck.org:

FactCheck.org

Second, it is very hard to compare insurance plans before and after the Affordable Care Act because the ACA-compliant plans have a minimal level of benefits. Finally, national averages are not very enlightening given that each state is its own individual insurance market.

Larry Levitt, one of the co-authors of the Kaiser report, added: "One other way in which those two numbers may represent an apples to oranges comparison is that they reflect averages across people, and the composition of who is insured could be very different. For example, very few kids – who have much lower premiums – are enrolling in marketplace plans because they are generally eligible for Medicaid or CHIP [Child's Health Insurance Program], yet the 2010 figure for the individual market represents an average across adults and kids."

The same Kaiser data show that a bronze plan would cost $249 on average—and $181 in Tennessee. In 2010, the average for Tennessee was $204, so even using the same reports as Alexander, one could make a case that premiums have dropped depending on the plan selected. (There are also huge differences in costs, depending on age, from $146 for the second lowest silver plan for 21-year-old to $392 for the same plan for a 55-year-old in Tennessee, according to Kaiser.)

Moreover, Alexander is ignoring the impact of premium tax subsidies, a key feature of the health care law. A June report from HHS says that 78 percent of Tennessee residents receive some form of subsidy, which reduce their premium by nearly 70 percent on average. The average premium before tax credits is $281—and $86 after credits. (Alexander doesn't include the impact of tax credits because the conversation with Obama was about premium costs before tax credits.)

As for that Fox News quote that "Alexander was right," the reporter did say that, though the Fox News graphic made clear the perceived increase did not account for the impact of tax subsidies. The CBO report said that those subsidies would reduce premiums by 56 to 59 percent.

Alexander's office declined to provide an on-the-record response.

The Pinocchio Test

Alexander mixes up so many apples and oranges here that the ad is a virtual fruit basket.

As a general matter, one could say that individual premiums have gone up, in part because the health-care law mandates a rich package of benefits. But one cannot ignore the impact of tax subsidies—or easily compare pre-ACA plans with post-ACA plans.  Alexander may want to relive his moment in the national spotlight, but he's misleading viewers with his math that premiums have risen more than 50 percent.

Two Pinocchios

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Glenn Kessler has reported on domestic and foreign policy for more than three decades. He would like your help in keeping an eye on public figures. Send him statements to fact check by emailing him, tweeting at him, or sending him a message on Facebook.