There have been many criticisms of the Affordable Care Act, otherwise known as Obamacare. But this one came from an unexpected direction.
“You’ve got this crazy system where all of a sudden 25 million more people have health care, and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half and it’s the craziest thing in the world,” former President Bill Clinton said Monday at a rally in Michigan. He also said, “But the people getting killed in this deal are the small business people and individuals who make just a little bit too much to get any of these subsidies.”
Say what? The comments exploded into the political scene. Democrats smacked their foreheads in disbelief. Republicans clapped their hands with joy. Clinton walked them back somewhat. It is clear that Obamacare has its share of problems. For example: Several large insurance carriers have walked away from the exchanges, and as a new round of enrollment is set to begin on November 1, it is anticipated that premiums for policies purchased on the law’s exchanges will jump considerably. All this has made the law a political football.
But, beyond the partisan fallout, which was and is considerable, it looks like the Explainer-in-Chief, has some “splaining” to do since his analysis of the law’s short-comings is, for the most part, dead wrong.
First of all, just who is he talking about? Certainly not the nearly 56% of the population that got their health insurance through their job in 2015. Studies by the Kaiser Family Foundation and the Commonwealth Fund, two organizations that track health care costs, indicate the premiums and deductibles were rising even before the Affordable Care Act was passed in 2010. Premium increases have slowed down while deductible hikes have continued at about the same rate. Indeed, a study by Kaiser indicated that premiums for the average employer-provided family plan went up by 31% in the five years before the law was enacted, and by just 20% in the five years afterward. One reason for the flattening out was the recession, another is that the higher deductibles and co-pays employers and insurance companies increasingly require are forcing consumers to be more thrifty in shopping for medical care.
Premiums for the most popular policies purchased on the Obamacare exchanges have risen at a slower rate than what was originally projected. A survey of major cities in 16 states plus the District of Columbia done by Kaiser found that premiums for the most popular “Silver” policies — the second cheapest policy available on the exchanges — increased by a mere 2% on average this year. Analysts anticipate a hefty jump of about 9% in these premiums in 2017 as several federal programs to help insurance companies hold down costs expire.
But the estimates of sky-rocketing premiums on the exchanges voiced by some critics are based on requests from insurance carriers. And until state regulators approve, deny or modify those requests no one — not even Bill Clinton — knows how large the premium hikes will be. And even if they are gargantuan, more than 80% of those who buy policies on the exchanges qualify for federal subsidies that keep their payments at roughly the same percentage of their incomes that they paid this year.
Clinton is right when he says that the people who will be hurt the most are those who buy their insurance on the individual market, but earn too much to qualify for the subsidies. But how many people is that? Using census data, the Commonwealth Fund estimated that about 8 million people were in the private health insurance market place last year and not eligible for government help. That’s about 3.2% of all people under the age of 65 who have health insurance. Now, 8 million people struggling is nothing to sneeze at. But is 3% of a proportion of people with health insurance enough to justify Bill Clinton calling Obamacare “the craziest thing in the world?”
So what about the law’s impact on small business? Bill Clinton also said Obamacare was hurting “moderately successful small businesses.” But businesses with 50 employees or less — more than 90% of all small businesses — are exempt from the ACA mandate that companies provide health insurance. Until the end of 2017, those small businesses that voluntarily cover their employees are also allowed to provide cut-rate plans that do not meet the law’s requirements for minimum coverage.
To be sure, the law does place some burdens on small business and 52% of small businesses said in a survey done by the National Federation of Independent Business that rising health care costs is their number one problem. But that was also the case before Obamacare came along as can be seen by the fact that the rate of small businesses dropping health care coverage for employees is roughly the same in the years before the law was passed than it was in the years afterward. It could be what’s happened here isn’t so much that Obamacare didn’t hurt small businesses but it didn’t help them very much.