For the most part, the media stories with their wildly divergent headlines got the requisite quotes from politicians. Evan Bayh told The New York Times: “This study indicates that, for most Americans, the bill will have a modestly positive impact on their premium costs.” Mitch McConnell told the Journal: “A bill that’s being sold as a way to reduce costs actually drives them up.” But rather than padding their stories with political quotes, the press needed to look under the skin of the CBO report. The Journal, to its credit, did say that the report “painted a more complicated and uncertain picture” than the Democrats and the White House were presenting.
There wasn’t a lot of discussion about some of the CBO’s assumptions, and the important context that accompanied them. For example, the CBO said that its calculations for the individual market “reflects the expectation that many people would opt for a plan that was more expensive than the reference plan, to obtain either a higher amount of coverage or other valued features.” That hasn’t happened in Massachusetts, where nearly half the people who have bought a policy through the Connector shopping service chose the least expensive policies.
Nor did the CBO look at the increased spending on medical care that might occur when millions of new customers come to the health care system, using services that add to total medical expenditures. The CBO said it couldn’t precisely quantify those effects, but speculated that the impact on premiums “would probably be small.” Many experts say that adding thousands to the Massachusetts insurance rolls helped raise the price of care in the state. As Boston University health policy expert Alan Sager told Campaign Desk: “If we cover more people with no offsetting cost controls, we can expect Massachusetts health care to be even costlier than in 2004.”
There wasn’t much probing about what’s likely to happen to premiums before 2014, when the law will probably take effect. It’s a safe bet that they will rise. They are already back in the double digits for many employers—both large and small. I have to swallow an eleven percent increase this year for my own coverage from a retiree group plan. A memo sent to the staff at the Children’s Aid Society in New York noted that one of its carriers imposed a 21.9 percent increase, which will cost the nonprofit an extra $545,000 in 2010. Another insurer slapped the Society with a 12.6 percent increase. Who knows what will happen in 2011, 2012, and 2013, as the cost of care continues to rise?
And where was the reminder that Obama pledged that his health plan would lower premiums by an average of $2500 for a typical family? The CBO report certainly didn’t support that claim. Reporters need to add context like this if they want to help tell the real story about insurance premiums and health reform.