Study Destroys GOP Obamacare Premium Hike Myth: ‘The Rate-Shock Concerns Were Overblown’

“The rate-shock concerns were overblown,” said Christine Eibner, a senior economist at Rand Corp., a California-based nonprofit research group that is releasing a report Thursday that examines insurance premiums for workers at small firms. “It’s likely the effect will be small.” Nationally, the report said, average premiums for equal plans would cost $5,837 with Obamacare in effect and $6,192 without it — a $355 savings under the Affordable Care Act. Premiums at large companies weren’t examined in the report. But Rand’s report only examined companies with fewer than 100 workers. Large companies have been providing health coverage to their employees for years but they are always looking to cut costs.

Last week, for example, United Parcel Service Inc told non-union employees that their spouses would no longer qualify for company-sponsored health insurance if they could get coverage through their own jobs. Blaming the new healthcare law, UPS told white-collar workers two months ago that 15,000 working spouses eligible for coverage from their own employers would be excluded from the UPS plan in 2014. According to USA Today, company officials also said the move, which applies only to non-union U.S. workers, should save $60 million a year. Many analysts note that such moves are part of a long-term trend of shrinking corporate benefits, but UPS repeatedly cites Obamacare in explaining its decision. According to a survey released in March by consultant Towers Watson and the National Business Group on Health, 4 percent of large employers excluded spouses from their health plan in 2013 if they could buy coverage where they work, and 8 percent more planned to do so for 2014.

In an article in Forbes, Avik Roy former healthcare consultant for Mitt Romney states, with all the ‘objective’ might of the partisan he is: “We know that Obamacare will significantly increase the cost of individually-purchased health insurance in nearly every part of the country. But we’ve generally assumed that disruptions in the market for employer-sponsored health insurance will be less severe. In particular, large employers who self-insure should be exempt from most of Obamacare’s most onerous regulations. It turns out, however, that even America’s largest companies face higher costs due to the health law. A recently-leaked letter from Delta Air Lines to the Obama administration states that the ‘cost of providing health care to our employees will increase by nearly $100,000,000 next year,’ much of it due to Obamacare.”

Suffice it to say, Delta’s numbers are convoluted and misleading. Delta speaks of additional costs for coverage of adult children up to age 26 at a cost of more than $14 million. They speak of reinsurance fees that will cost an additional $10 million. Delta estimates that it will cost them another $14 million for employees that will now elect to take insurance that have been declining because of the individual mandate in the new law. Even if true, and no doubt highly exaggerated, it only totals $38 million.

Roy concludes that “President Obama keeps insisting that, “for the 85 percent of Americans who already have health insurance,” life will be even better than it is today. But that’s patently untrue. The so-called “Affordable Care Act” will make health care less, not more, affordable.” But even Roy is forced to first admit “It’s not clear exactly how much of that sum is due specifically to Obamacare, and how much is due to health inflation and the end of Obamacare’s Early Retiree Reinsurance Program, a $5 billion fund used to encourage employers to continue providing health benefits to early retirees in the near-term.” And Roy also acknowledges, “Delta doesn’t like Obamacare’s “Cadillac tax” on high value insurance plans. But that’s because the tax is doing exactly what it should do: motivating employers to pare down on costly plans that drive premiums upward.”

On the other side of the coin is Howard Schultz, CEO Starbucks, “I don’t believe that…the health care law should be a reason or a motivation to cut benefits for either the employee or spouses,” Schultz said. “An investment in your people is an investment in shareholder value.” “Other companies have announced that they won’t provide coverage for spouses; others are lobbying for the cut-off to be at 40 hours. But Starbucks will continue maintaining benefits for partners and won’t use the new law as an excuse to cut benefits or lower benefits for its workers,” Schultz said in a telephone interview.

Tami Luhby for CNN Money tries to explain why, in some states, premiums will rise dramatically and not in others. Premiums in states like New York and California have dropped dramatically, while there are concerns about cost increase in states like Ohio, Florida, and South Carolina. But these red states have opposed ObamaCare and their projected increases do not take into account federal subsidies. There are other contributing factors such as age, deductible, benefits and quality of the plan. According to Joan Peters spokeswoman for the Department of Health Human Services, “When the marketplaces open on Oct. 1, plans will have to compete side by side, and consumers will be able to choose the one that best fits their budget and needs.” And even if rates do rise a bit “A lot of people will get more for their money,” said Sarah Lueck, senior policy analyst for the Center on Budget and Policy Priorities.

The Editorial Board commentary by the St. Louis Post Dispatch “Desperately flailing at Obamacare as it saves lives and money” concludes The Affordable Care Act is not perfect and may never be. Inevitably, economics will force it to give way to a single-payer national health care system. But in the meantime, it’s saving lives, saving money and making health care available to those who, as in parable of the Good Samaritan, were left to suffer at the side of the road.

Jon Favreau, the president’s former top speechwriter, argues that the uptick in the anti-Obamacare crusade is a result of Republicans’ being “terrified that Obamacare could actually work.” In a July 11 article in thedailybeast.com, Mr. Favreau asked, “If Republicans are so confident Obamacare will end badly, why not just shut up about it?”

As the Dispatch says: “The fact remains that even though some big insurance companies have refused to sign up, states that have created insurance exchanges have seen the ‘magic of the marketplace’ — once a favorite phrase of Republicans — drive down the cost of individual health insurance policies. In New York, Oregon and California, rates have fallen as much as 50 percent.”