Says that under President Barack Obama’s health care law, “your insurance” premiums could go up by 200 percent.
Former Republican Sen. Fred Thompson in a tweet March 27
As District Attorney Arthur Branch on “Law & Order,” former Sen. Fred Thompson was always ready with a wisecrack. In a recent Twitter post, the Tennessee Republican offered a pointed barb about President Barack Obama’s health care law:
“Report: Obamacare could raise ins premiums by 200%. It’s the ‘A-Ford-able Care Act’ — your insurance costs as much as a new Explorer.”
As we looked into whether Thompson’s comparison was accurate, we found a trail of facts twisted into a misleading narrative.
Why premiums will go up
First, we should make clear that independent, credible experts do expect health insurance premiums to increase for many people once the health care law takes full effect.
The law is so complex that it’s difficult to predict its ultimate impact on premiums. But some parts of the law should reduce premiums (subsidies for lower-income Americans and rebates from insurers that charge too much for overhead) while other parts should increase premiums (more mandatory benefits). The impact on individuals will likely depend on income and type of insurance.
Type of insurance proves to be crucial in analyzing Thompson’s claim.
There are three types of private-market insurance. Large-group plans supply coverage through an employer with more than 50 employees. Small-group plans work the same way, but for smaller companies. The third type is the nongroup market — policies that people buy on their own. Large-group plans account for roughly 70 percent of private policies, with small-group plans accounting for about 13 percent and the nongroup market about 17 percent.
The health care law is expected to affect each type of policy differently. In 2009, the Congressional Budget Office projected that by 2016, insurance premiums in the large-group market would either stay the same or drop by up to 3 percent, while the small-group market would see anywhere from a drop of 2 percent to an increase of 1 percent. The biggest increases would be in the nongroup market, where premiums were projected to rise between 10 percent and 13 percent.
There’s a logic to this pattern: Nongroup policies typically offer high-deductible coverage with low premiums. But under Obama’s law, all plans must provide a fixed list of benefits such as preventive care, and adding these services will come at a price. So it’s reasonable for Thompson to point out that this portion of the market — accounting for about one in every six private policies — will take a financial hit.
The congressional Republicans’ report
We failed in our efforts to reach Thompson, but the first clue to figuring out his math is to look at the first part of his tweet: “Report: Obamacare could raise ins premiums by 200%.”
The report was released in March by the Republican staffs of three congressional committees. It is hardly a neutral document, given that it was written by staffers of a party that has worked to repeal the health care law since it was passed in 2010. Still, Thompson’s tweet goes much further than the report does, and it ignores some important qualifiers.
The Republican staff report says that “some estimates show some Americans facing startling premium increases of 203 percent because of the law.”
Let’s parse this statement. First, “some estimates” refers to a January study done by former CBO Director Douglas Holtz-Eakin, a top-level economic adviser to President George W. Bush and the presidential campaign of Sen. John McCain, R-Ariz. His survey asked a range of companies to share premium quotes for individuals with specific demographic characteristics in five cities, before and after the health care law took effect.
The numbers around 200 percent in the study refer to “young adults in the individual market” for certain cities. For instance, in Chicago, a young adult in the individual market before Obamacare would pay a premium of $756, rising to $2,268 after the law — an increase of 202 percent.
Looking at these figures in isolation amounts to cherry-picking. To its credit, the report made an effort to put this number into context by listing smaller projected increases as well. For instance, when it lists projected increases in the 50 states for all people with individual insurance — not just “young adults” — these premium increases range from 30 percent to 100 percent. And the report cites two studies that support figures on the low end of that spectrum: one by the actuarial firm Oliver Wyman that suggests increases of 40 percent in the nongroup market, another by the Society of Actuaries that suggests a rise of 32 percent.
And there’s an additional level of cherry-picking going on as well. The Republican report looks only at the nongroup market, a sliver of the entire private-insurance market.
Our ruling
Thompson’s tweet spins a few snippets into a misleading tale.
By some estimates, premiums for certain Americans could go up by 200 percent — but only for a very specific type of person, namely young, healthy people who have already bought insurance on the nongroup market and will continue to do so.
Thompson’s tweet illustrates what can happen when eye-catching statistics are cherry-picked and repeated without the proper context. We rate the claim False.
