Fact-Checking Obama’s Health-Care Speech

The fact-checkers are likely to run out of Pinocchios after President Obama’s speech today at the White House touting Obamacare.

The biggest whopper is his argument that the health law is expanding access to affordable health coverage, when evidence across the states shows that premiums will increase in many states and for many consumers by double digits or more. 

The White House is bragging wildly about a New York Times article, which is more like a press release than a news report, that says state numbers suggest individuals shopping for health insurance in New York would see their premiums cut in half.

Avik Roy, a senior fellow at the Manhattan Institute and a columnist for NRO, has taken a deep dive into the claims about premium reductions in New York and finds New York’s premiums will remain among the costliest in the nation after Obamacare becomes fully operational. Legislation passed over the last two decades has driven health-insurance premiums in the state to among the highest in the country, so premiums have nowhere to go but down. And the primary driver of the lower premiums is the widely despised individual mandate, which will force healthier, reluctant buyers into the exchanges.

In New York, legislation was passed in 1992 barring insurers from charging different premiums to people in different age groups. Obamacare adopted a modified version of this community rating that distorts the market a great deal, too, although slightly less. In addition, insurers were required to sell policies to people even if they wait to sign up until they’re sick, a policy known as guaranteed issue. Welcome to the world of Obamacare.

Others states that haven’t done as much damage to their individual health insurance markets in the past will find that Obamacare does it for them. As New York found, insurance regulations that distort market pricing drive up costs, primarily by pushing healthy people out of the market.

“In the vast majority of states,” Roy writes, “Obamacare has the net effect of raising premiums by a lot, which has given rise to the term ‘rate shock.’ In California, for example, a healthy 40-year-old today can pay $94 per month in the individual market; that rises to $234 a month under Obamacare: an increase of 149 percent.”

And California is not an outlier. The Ohio Department of Insurance announced that the average individual-market health-insurance premium in 2014 will cost 88 percent more. According to Ohio insurance regulators, “Consumers will have fewer choices and pay much higher premiums for the health insurance starting in 2014. . . . Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223 . . . [and] the average to cover those costs in 2014 is $420.”

In Rhode Island, health-insurance commissioner Christopher Koeller announced that new rates for large employers will be 9.6 to 12 percent higher.

The young people that the president wants most to attract to the market for health insurance will find that the average $200 a month in premiums they will have to pay, even after receiving their share of the billions in Obamacare’s taxpayer subsidies, will be a real awakening to the costs of the law. 

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