What Obama Won't Say: Some People Will Pay More for Health Care

Obama Photograph by Olivier Douliery/Getty Images

It’s easy to see why the Obama administration buried this report (PDF) on a late Friday afternoon news dump at the end of a holiday week. The headlines it prompted (after John Boehner alerted reporters on Monday) look terrible.

Indeed, 11 million workers in small businesses are likely to pay more for health insurance under the Affordable Care Act, according to the report from Medicare’s chief actuary. An estimated 6 million workers will pay less, as the law’s market reforms restrict what insurers can charge to cover employees who are sick or older or are women facing higher costs related to pregnancy and childbirth.
The White House’s treatment exemplifies a problem President Obama has had since he began pitching his health-care law. He has avoided acknowledging the hard truth that changing the insurance rules means that some people will have to pay more. That elision has returned to haunt him, as it did this fall, when millions of policy cancellations fed nightmarish news cycles for Democrats.
Here’s Obama in 2009, talking to business owners as the health law was being drafted in Congress:

Right now, if just one of your workers falls seriously ill, it could spell disaster for your entire business. You could see your premiums shoot up and you face a painful choice: Do you eat the costs and ask your workers to contribute more? Do you seek another insurance plan, without any guarantee that you’ll be able to find one that’s affordable? Or do you just scale back benefits or drop coverage altogether? … Under health insurance reform, we put an end to the days when an insurance company could use one worker’s illness to justify jacking up premiums for everybody.

Now that’s the law. Insurers can no longer charge small companies more if one worker’s cancer treatments or organ transplant sends the company’s medical claims through the roof. They can’t charge more for employing lots of women of child-bearing age. And they can charge more for older workers only within limits.

Insurers can vary premiums by geography and depending on whether people seek coverage only for themselves or for their families. They can also tack on surcharges for smokers. But the old days of medical underwriting—when those who were sick paid more to get coverage, if they could at all—are gone.

That’s great news for cancer patients and others with chronic diseases, as well as for women and older workers. They’ll pay lower premiums than they otherwise would.

Conversely, companies that employ young, healthy, low-risk workers will have to pay more than they would have. Before the Affordable Care Act’s reforms, such employers were more likely to offer health insurance precisely because premiums were lower, the Medicare actuary’s office wrote. Businesses that benefited under the old system have to pay more, though this bit of bad news could turn into good news if one of those young, healthy, low-risk employees gets cancer.

Ending insurance rules that discriminated against groups that tend to have higher medical costs—older people, those with chronic illnesses, child-bearing women—means that those with lower medical costs will pay more. That’s not a slogan-ready idea. It probably wouldn’t have been a popular argument for a White House trying to push a sweeping reform.

It’s now a mathematical reality. While the White House and its allies may prefer to ignore it, their critics won’t.

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