Over the past few days, Erza Klein and Jonathan Cohn among have debunked the claims by Avik Roy of Forbes that Obamacare will produce a "rate shock" in California. As they noted, Roy conveniently ignored the fact that many people individual market cannot currently buy insurance at any price, let alone at the "teaser" rates insurers use to lure new buyers. Just as important as Roy's omission of the estimated 22 percent nationwide who are now rejected for pre-existing conditions was his skipping over Obamacare's new subsidies that will make coverage affordable for millions more.
Now, a new poll is repeating many of the same mistakes and producing many of the same kinds of frightening Obamacare headlines. Pointing to a survey commissioned by InsuranceQuotes.com, CNBC reported "Two-Thirds of Americans Don't Know If They Will Insure Under Obamacare," while The Atlantic Wire fretted, "What If Healthy People Don't Want to Buy Obamacare?" As it turns out, all the misinformation and hysteria could largely have been avoided if all involved simply looked at Massachusetts, where a virtually identical health care reform law is now in its seventh year. After all, 98 percent of residents there now have health insurance, while the number paying the penalty instead was just 44,000 out of 6.6 million people by 2010.
Already getting their insurance through their employers or from government programs like Medicare and Medicare, most Americans will be unaffected by the looming Jan. 1, 2014 enrollment deadline. For its part, InsuranceQuotes.com explained that "many consumers aren't clear on eligibility requirements for these health care subsidies. In fact, the survey showed that 58 percent of Americans aren't sure if they'll qualify for help with their health insurance premiums." But thus far, the media has seized on this nugget:
A new survey shows almost two-thirds of uninsured Americans still aren't sure whether they'll comply - and many are confused about whether they'll be eligible for tax credits to help pay premiums.[...]Of course, that didn't happen in Massachusetts. In 2011, the National Bureau of Economic Research (NBER) released a study showing that 2006 Massachusetts health care reform was in fact making Bay State residents healthier. Importantly, the authors noted that "the general strategies for obtaining nearly universal coverage in both the Massachusetts and federal laws involved the same three-pronged approach of non-group insurance market reforms, subsidies, and mandates, suggesting that the health effects should be broadly similar." But as I explained last year, the same should be true about the small numbers of people forecast to pay penalties rather than buy health insurance as mandated by the Affordable Care Act:
The survey reveals that 64 percent of the uninsured say they haven't decided whether they will buy health insurance by Jan. 1, 2014, as required by the Affordable Care Act (ACA), which is also known as Obamacare.
Only 19 percent said they will get coverage by the deadline, while 10 percent said they plan to stay uninsured and pay the penalty, which in 2014 is the greater of $95 or one percent of income for an adult.
As you will recall, the Affordable Care Act is forecast by the nonpartisan Congressional Budget Office (CBO) to reduce the U.S. national debt. It does this in part through $500 billion in new tax revenue over 10 years. But as it turns out, penalties for noncompliance with the individual mandate to purchase insurance represent only a small fraction of those funds. The CBO estimates only 4 million people (less than 2 percent of the population) will pay that penalty, producing just $65 billion in the first decade of the law.Of course, you don't have to take my word it. As the New York Times and AP ("In Mass., individual mandate sparks little outcry") reported last year during the 2012 presidential campaign, fears about affordability and non-participation in the state with the nation's highest insurance premiums did not come to pass. As CBS report on Romneycare's sixth anniversary described the case of 61 year old Mary Flynn, who lost her health insurance after she left a corporate job to start her own business:
Which is very similar to the experience in Massachusetts, where six years ago Governor Romney signed what MIT professor and adviser Jonathan Gruber called "the same f--king bill." Enjoying the consistent support of Bay State residents by a 2 to 1 margin, the bill Governor Mitt Romney signed into law lowered the uninsured rate from around 10 percent to a national low of two percent [...] And as it turns out, only 48,000 Bay State residents out of a population 6.6 million opted to pay the penalty ranging from $228 to $1,212 a year rather than acquire health insurance under Mitt Romney's version of the individual mandate. That's less than half the national rate projected by the CBO.
"I was totally scared. I didn't know what I was going to do," she said.The supposed Massachusetts rate shock didn't materialize, either. While slightly higher than the national average between 2006 and 2010, for 2012 state regulators said rate increase would be only 1.2 percent. And the Boston Globe reported three weeks ago, the trend is continuing. "Health insurance base rates will rise an average of 2.5 percent for Massachusetts small businesses and individuals renewing their policies July 1. The increase is slightly smaller than the 2.7 percent average base rate hike for policies renewed in the current quarter."
She found that her lower income made her eligible for a subsidized plan that now costs her nothing.
Still, insurance premiums in Massachusetts have increased from an average of $331 per month in 2006 to $401 per month in 2010.
In Massachusetts, there is not just an individual mandate to buy insurance, there is also an employer mandate to provide it, and employers do for 79 percent of Massachusetts residents, up ten percent since health reform was implemented, bucking the downward national trend, whereby only 60 percent of employers nationwide provide health insurance.
The penalties for individuals not enrolling in a plan range from $19 a month to a maximum $105, depending on income. People earning less than $16,345 a year are exempt from the mandate. The fine is no more than $58 per month for those earning up to $32,676 per year. Above that, refusal to enroll leads to the $105 bill.
Every year, the number of Massachusetts residents opting out of health insurance has shrunk from 67,000 in 2007 to 44,000 in 2010.
And that's not all. As the CBS story suggests, far from dropping insurance coverage for employees, Massachusetts employers added more. As a PriceWaterhouseCoopers analysis found, after passage the Massachusetts law, workers who passed up employer plans previously decided to opt in, while employees at firms lacking coverage soon demanded it.
To be sure, the national Affordable Care Act and the Massachusetts law are not exactly the same and different states are differentially situated. As the Washington Post explained, "Massachusetts is a relatively rich and liberal state that already had a fairly high rate of health insurance." And there's another reason why "the Massachusetts experience might not prove an apt guide to the national experience":
Although the Massachusetts reforms are architecturally similar to the Affordable Care Act, they didn't have to contend with a political party working relentlessly to undermine their implementation.That, and conservative propagandists pretending Massachusetts' success never happened.