Americans for Prosperity is again citing an unscientific survey on health premiums to attack Democratic supporters of Obamacare – this time claiming in a new TV ad that premiums are up “by nearly 40 percent” in Michigan.
But the ad – which targets Democratic Rep. Gary Peters in the Michigan Senate race – ignores some important caveats about the 40 percent figure:
- The ad leaves the false impression that the rate hike applies to all health premiums, but the figure refers only to the no more than 5 percent of Michiganders who get insurance on the individual market.
- The 40 percent figure is based on a survey of six insurance brokers in the state, and according to a survey expert has no statistical validity.
- The figure, even if it were accurate, doesn’t account for improved coverage or government subsidies, which 80 percent of those in the new individual market exchanges are expected to receive.
The AFP ads began airing statewide in Michigan on May 28 and will run for several weeks. Peters, a three-term congressman, is locked in a see-saw battle with Republican and former Michigan Secretary of State Terri Lynn Land to succeed Sen. Carl Levin, who is retiring. Americans for Prosperity, which was founded by billionaire businessman and conservative/libertarian political activist David Koch, has actively opposed Peters for his support of the Affordable Care Act, though its ads have not always been accurate about the effects of the law.
The ad’s narrator talks about rising costs for Michigan families and alleges that Peters is “making things worse, voting for Obamacare, driving up our health premiums by nearly 40 percent.”
The ad suggests health insurance premiums are going up nearly 40 percent for everyone in Michigan, and that’s simply not the case. Employer-sponsored plans, where most Americans (and Michiganders) get their coverage, have seen premiums growing at historically low rates in the past few years.
Employer-sponsored premiums for family plans went up 3.8 percent on average in 2013, according to the Kaiser Family Foundation’s annual employer health benefits survey. The 2014 figures have not yet been published. Since the ACA was passed in 2010, employer-sponsored premiums have gone up 5.9 percent on average per year, while in the five years before the ACA, premiums went up 4.8 percent on average per year.
Health experts attributed to the ACA a 1 percent to 3 percent increase in employer-based premiums between 2010 and 2011 — when the law was first put into place — due to its required elimination of preexisting condition exclusions for children, the coverage of dependents on their parents’ plans up to age 26, free coverage of preventive care, and the increase in caps on annual coverage. But Kaiser Family Foundation CEO Drew Altman attributed at least some of the 2013 slowdown to the ACA as well.
That’s the picture for the employer-based plans held by most people in the state, but it turns out the AFP ad’s claim only relates to the no more than 5 percent of Michiganders in the individual market. Small print in the ad cites an April 7 story in Forbes, which is about a survey of 148 insurance brokers by Morgan Stanley, to help guide investor decisions about stock purchases. A state-by-state chart suggests a 35.6 percent increase in rates in the individual market in Michigan in 2014, according to responses from six insurance brokers in the state.
We’ve cautioned our readers before not to put too much stock in this Morgan Stanley survey.
Previously, it had been cited by AFP and others as the basis for a claim that rates have gone up 90 percent in New Hampshire — based on the response of one insurance broker in that state. Robert Santos, senior methodologist at the Urban Institute and past president of the executive council at the American Association for Public Opinion Research, told us then that the survey has no scientific validity with regard to the aggregated nationwide results. And that’s particularly true of the state results, which are based on so few responses, he said.
“Anyone would be on very tenuous ground in trying to make a state-specific inference,” Santos said. (A small notation below the state chart uses technical jargon to warn the same thing.)
Nonetheless, that’s exactly what AFP has done in Michigan.
It is quite possible, even probable, that rates have gone up in the individual market in Michigan. The Affordable Care Act requires plans to offer a minimum set of benefits, and that increases the cost of some plans. Those changes also make it extremely difficult, if not impossible, to compare individual market rates in 2014 to those in previous years for comparable policies.
We reached out to Michigan’s Department of Insurance and Financial Services for premium information on the individual market to see how the Morgan Stanley figures stand up. Caleb Buhs, a spokesman for DIFS told us that while the state did compile rate information for 2014 in the individual market, there is no comparable data from previous years.
“It would be difficult to compare 2014 rates to previous years anyway due to the changes required by the ACA; it wouldn’t be an apples-to-apples comparison,” Buhs wrote to us in an email.
DIFS is headed by Director Ann Flood, who was appointed in November 2013 by Republican Gov. Rick Snyder.
As we have said before, those in the individual market faced the biggest changes under the law. Premiums in that market could go up or down, perhaps significantly, depending on the individual. The market has seen great variation in pricing and the level of benefits offered. This makes it “difficult, if not impossible, to make generalized statements of the effect of the new law on premiums,” Linda J. Blumberg, a senior fellow with the Urban Institute’s Health Policy Center, wrote in a July 2010 report. And experts say that’s still the case.
In a September 2013 report, KFF said the changes in the market because of the law — such as essential health benefit requirements and no denial or price variation based on health status — “make direct comparisons of exchange premiums and existing individual market premiums complicated, and doing so would require speculative assumptions and data that are not publicly available.”
In 2009, the nonpartisan Congressional Budget Office said that the average premium per person in the individual market would be about 10 percent to 13 percent higher in 2016 because of the health care law compared with what the average would have been in that same year without the law’s passage. But it added that for most, subsidies would push their costs “well below” what they would have been charged in the absence of the law. In its latest report, the CBO says about 80 percent of an estimated 25 million joining the exchanges by 2024 will receive subsidies.
Last month, CBO reported that its 2009 estimate of premium increases in the individual market was too high. CBO expected plans in the new exchanges would closely resemble employer-based plans, but it has found, in general, “lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers’ use of health care than employment-based plans do.” In other words, the plans so far aren’t quite as advantageous as employer plans.
CBO estimated the average cost of individual policies for the second-lowest-cost “silver” plan in the exchanges is about $3,800 in 2014. That’s expected to rise slightly to $3,900 in 2015, and then increase by about 6 percent a year until 2024.
All of that CBO data is looking at 2014 — when the exchanges were created — forward to 2024, not from 2013 to 2014 (which the ad highlights). Again, there likely was some increase in individual market rates this year due to new minimum requirements for individual market plans. So some are paying more to get better insurance, whether they wanted it or not. But for many, those increased costs were offset by government subsidies. And some individuals who previously faced higher rates because of medical conditions will pay less under the ACA, which requires that insurers not price individual market plans based on health status.
None of that is considered in the Morgan Stanley survey. And perhaps most important, it would be unwise to put much stock in a survey of six insurance brokers in Michigan to arrive at a solid number on premium increases in 2014.
— Robert Farley