A Project of The Annenberg Public Policy Center

Obama’s Glowing Assessment

The president made another push for health care legislation March 3, while being flanked by physicians and nurses in the East Room of the White House. Much of what he said in describing his proposal was correct, but he went a bit overboard with a few of his statements.

In a remark reminiscent of last week’s spat with Republican Sen. Lamar Alexander over premiums, Obama said most people would save money under his plan:

Obama: Our cost-cutting measures mirror most of the proposals in the current Senate bill, which reduces most people’s premiums.

Well, it could reduce most people’s premiums. Or those premiums could just stay the same. The nonpartisan Congressional Budget Office analyzed the Senate bill and found that in the large group market (those working for large firms) the average premium cost per person would see no change at all or be up to 3 percent lower, compared with where premiums would be under current law. For the small group market, the change in cost for the average premium would range from a 1 percent increase to a 2 percent decrease.

Those are averages, so some premiums would go down by more — others would increase by more. The president would be on much firmer ground to say most people’s premiums wouldn’t change significantly. 

Obama also claimed that those who buy insurance on their own will get a better deal. But that’s subjective.

Obama: And my proposal says that if you still can’t afford the insurance in this new marketplace, even though it’s going to provide better deals for people than they can get right now in the individual marketplace, then we’ll offer you tax credits to do so.

The individual marketplace could well offer "better deals" for many people. Insurance companies won’t be allowed to discriminate on the basis of preexisting conditions, and the mandate to have coverage will bring more healthy people into this insurance pool. That would bring down costs. But, average premium costs per person actually go up in this market, by 10 percent to 13 percent, according to the CBO. That’s because benefits will get a lot better, too — due to a mandate to provide a certain standard level of coverage and due to those tax credits that entice people to buy better plans. More coverage for more money may well represent a better deal for some — others, not so much. It’s safe to assume at least a few of the healthy folks out there who are buying bare-bones, cheap policies won’t agree that more coverage for more money is a "better deal" for them.

He also repeated a promise he can’t make to everyone.

Obama: If you like your plan, you can keep your plan. If you like your doctor, you can keep your doctor.

Sure, that’s true for the most part. The bill doesn’t aim to change employer-sponsored insurance, and those who buy their own insurance can keep those plans through a grandfather clause. But there’s going to be some movement that’s out of the hands of some individual Americans.

The CBO estimated that 8 million to 9 million people who would normally be expected to have insurance through their jobs wouldn’t be offered coverage from their employers. CBO added that firms that dropped coverage would likely be smaller employers that mainly hire low-income workers, who would be eligible to receive subsidies to purchase their own coverage. Other individuals would gain employer-sponsored coverage under the bill. The net change for employer-offered insurance would be a decrease of 4 million people by 2019.

Another claim might have perked the ears of our readers. Obama was correct when he said:

Obama: [M]y proposal would give uninsured individuals and small business owners the same kind of choice of private health insurance that members of Congress get for themselves — because if it’s good enough for members of Congress, it’s good enough for the people who pay their salaries.

The insurance exchanges are designed to mirror the type of choices that members of Congress (and other federal employees) have. And, in fact, the Senate bill stipulates that members and their staffs would be required to buy insurance through those exchanges. The president’s plan also says members would face this requirement.

In these exchanges, insurance companies would compete for the business of millions of new customers, and their plans would have to meet minimum standards, just like the plans offered to federal workers. But, if some Americans thought this meant they would be treated just like federal employees, that’s not the case. The government isn’t going to pay 72 percent of the premium costs for everyone, the way it does for its own workers. About 57 percent of those buying their own plans in the exchanges would get subsidies that reduce their average premium costs substantially, by about 60 percent, according to the CBO. Employees of small businesses could also have some of their premium costs paid by their employer. But, depending on their income, others would simply be required to buy coverage without any help, or pay a tax if they don’t.

Finally, the president said those tax credits given to individuals to help with the purchase of insurance would "add up to the largest middle-class tax cut for health care in history." We would alert readers to listen closely to the grandiose claim. Obama says it’s the largest "middle-class tax cut for health care" (emphasis added). And besides, since there is no agreed upon definition of who’s "middle class" and who’s not, we couldn’t say which cut should be considered the largest. Total tax credit and subsidy money in the Senate bill: $329 billion over 10 years. The president’s plan would increase that total.