In mid-May, The Spokesman-Review in Spokane trumpeted some good news for Obamacare, reporting that “Health insurance next year will cover more and cost less. Huge rate increases predicted by critics and by some health insurance companies, did not materialize.”
The same day the paper also ran a piece from The Associated Press advising readers that premiums in Oregon would be so low that two insurers were scrambling to re-file their rates to compete with lower price tags. An official from the Oregon Insurance Division announced that the rate comparisons were “a taste of what is to come.” In other words, cheap insurance is on the way.
A week later, the healthcare-rates-are-lower story moved down the coast to California, where the insurance premiums have become big, big news in a big, big state, one that will soon have an estimated 5.3 million people in its insurance exchange. The story moved quickly. Last week the advocacy group Health Care for America Now listed 33 news outlets, mostly marquee brands, that had picked up the exchange’s “important announcement.” California is a bellwether, headlines from around the country suggested, as news outlets from CNNMoney to The Hill signaled that rates in the state’s insurance exchange would be cheaper than expected. “California Insurance Exchange Rates: Not Too High, Not Too Low,” read the headline on the piece from Kaiser Health News, which quoted the executive director of California’s exchange, Peter Lee: “We’ve hit a home run for consumers. We held insurers’ feet to the fire.” Kaiser’s story reported the premiums were what Lee characterized as “just right”—Goldilocks pricing, surprising analysts and consumer advocates. “The fear had been that shoppers in the individual insurance market would face severe ‘sticker shock’ when the sweeping changes in the health law take effect beginning in January 2014,” Kaiser reported. No shock had materialized.
But the story the media told was a flawed one, characterized by gee-whiz reporting, a willingness to accept official spin, and failure to ask basic questions. “I don’t see rates going down anywhere I look,” says Robert Laszewski, an industry consultant whose blog was required reading for reporters covering the health reform debate four years ago. “Rates are consistent with what the Society of Actuaries forecasted. The fight emerging is over how to compare rates.”
Insurance policies are a complicated mix of premiums, deductibles, coinsurance, copayments, benefits, and limitations. By their very nature they are difficult to compare. Furthermore, they vary depending on whether they are sold to big employers, small employers, or individuals buying on their own in the so-called individual market—the main target for Obamacare reforms. So it’s reporter beware when it comes to rate stories coming out of the new shopping exchanges. What rates are we talking about?
On Friday, Politico, in a good piece questioning California’s rate announcement, reported that the lower rates for next year for individual policies touted by Lee at his press conference were being compared to rates paid today by small businesses—not to policies purchased by individuals. California’s comparison was between next year’s apples and this year’s oranges. They were not even in the same orchard.
And to its credit, CNNMoney included in its piece a concession from the exchange that “a direct comparison is impossible because the new plans will provide more benefits”—due to the requirements of Obamacare. But CNNMoney also quoted the exchange in a way that should have alerted its reporter to the apples-and-oranges nature of the premium comparisons being made. It quoted the exchange comparing “rates for individuals” with “the average premium for small employers in the state’s most populous areas,” without following up.
The press kind of blew it. Instead of questioning the assumptions behind the exchange’s announcement, too many stories were like an AP story published in the San Jose Mercury News that quoted the vice president of Avalere Health, a data firm, saying that the exchange “brought the premiums down,” but failed to note that the same policies were not being compared. Other outlets, like California Healthline, The Washington Post, and The Hill made the same omission.
The Sacramento Bee began to get this crucial point with a quote from California’s insurance commissioner, Dave Jones, who cautioned: “It is premature to hazard an opinion as to how these rates compare to rates in the individual market today or whether they are justifiable.”
One exception to the less-than-skeptical coverage came from Chad Terhune, an insurance reporter for the Los Angeles Times, who asked the key question “Compared to what?”