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A Project of The Annenberg Public Policy Center

Ad Serves Up a Dose of Exaggeration

The Washington Post reported on March 9 that Employers for a Healthy Economy, a coalition of business groups that includes the National Association of Manufacturers and the U.S. Chamber of Commerce, plans to spend up to $10 million running an ad about the effects of health care legislation on the economy.

The ad, which portrays workers and businesses going through difficult times, says that "health care costs will go even higher" and that this will "[make] a tough economy even worse." These claims need context.

The ad doesn’t specify which "health care costs" will increase. If that means premiums, it’s right — but only for some people. For those who get health care through their employer (and that’s most of the insured), the average premium wouldn’t change significantly, according to the Congressional Budget Office. Those employed by large firms would either see no change in the average premium cost or a decrease of up to 3 percent. But the average premium for those who purchase their insurance privately will go up 10 percent to 13 percent, according to CBO. The benefits for people in this market would also improve, and more than half of those buying their own insurance would receive subsidies, which would lower their costs substantially. The CBO estimated that about 14 million Americans would buy their own policies without the help of subsidies.

If Employers for a Healthy Economy means overall federal spending for health care, it’s also right — for a while. CBO says that the "federal budgetary commitment to health care" would increase from 2010 through 2019 under this bill, to the tune of about $200 billion. But the provisions of the bill that decrease that commitment will grow faster than the provisions that increase it, meaning that after those 10 years, the CBO expects federal spending for health care to go down. It cautions, though, that there’s a lot of uncertainty here.

As for hurting a "tough" economy, the CBO does estimate that the bill’s proposed insurance expansions will cost $614 billion over 10 years, with a net deficit reduction of $132 billion. But many of the expensive provisions won’t take effect until 2014. Although economic recovery is slow going, the next four years are expected to be years of incremental improvement. CBO projects that unemployment will have returned to a sustainable level of 5 percent by 2014, that the deficit will have dropped to 3 percent of GDP (versus 9 percent this year), and that GDP will have increased enough to close the gap between actual and potential output. By the time the bill’s major provisions come into play, the economy is likely to be far less tough.

The ad also says that Congress plans to use "special rules" to "ram through" the health care bill. In our article about the health care summit, we wrote that this "special rule," known as reconciliation, has been used 22 times since 1980. Reconciliation would allow the bill to pass by a simple majority without the risk of filibuster. We’ll leave it to readers whether 22 uses in 30 years makes reconciliation "special," commonplace or something in between. But the Brookings Institution’s Thomas Mann, the author of a report on the use of reconciliation, told us that using reconciliation to pass a bill that had already passed both houses would be "very modest and unquestionably legitimate." 

Incidentally, this group backed by the U.S. Chamber of Commerce ran a very similar ad in November about a different version of the bill, the one passed by the House. We said then that independent experts believed job losses caused by the overhaul would be minimal, percentage-wise. And John Sheils of the Lewin Group has said that even fewer jobs would evaporate under the Senate’s version of the bill, which is the one currently under consideration.