The Corner

Will Obamacare Raise Individual Premiums or Won’t It?

President Obama and Sen. Lamar Alexander (R., Tenn.) had a (quite civil) disagreement just a few minutes ago about whether the CBO says the Senate bill will raise or lower insurance premiums in the individual market.

On rhetorical grounds, I agree with Rich that Obama won the brief exchange, telling Alexander “I’m pretty sure I’m not wrong” and promising to “settle” the question before the end of the debate. But the issue is a tricky one.

Here’s what the CBO director said of the bill: “The average, unsubsidized premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.

Point Lamar.

But the president countered by saying the increase would be the result of Americans choosing better coverage, referring to this, also from the CBO director: “Average premiums in this market would be higher than under current law primarily because the typical insurance policy in this market would cover both a substantially larger share of the average enrollee’s costs for health care and a slightly wider range of benefits.”

Point Obama, right?

But the key is that the president said people would choose better coverage at a higher cost. That’s misleading. Once more from the CBO Director:

That outcome would reflect the requirement that all new policies in the nongroup (and small group) market cover at least a minimum specified set of “essential health benefits”; the requirement that such policies have a certain minimum actuarial value (that is, the percentage of costs for covered services that the insurer pays); and the design of the federal subsidies, which would encourage many enrollees in the newly established insurance exchanges to join plans with an actuarial value above the required minimum.

So Americans would “choose” more expensive plans because the government would make typical plans more expensive via sweeping new regulations, and would shift the added cost to the taxpayer through massive subsidies.

Final score: Whether one thinks that it was Alexander or Obama who won on the semantics, there is no question that we all lose on the substance.

UPDATE: Senator Kyl (R., Ariz.) just gave the lie to the Obama claim quite effectively. He’s been the best Republican so far. Kyl focused on how the fact that the bill needs to raise so much revenue leads it to hurt some of the very people it is intended to help, e.g., raising the bar for deducting catastrophic health-care costs from taxes would impact middle-aged, middle-class Americans most.

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