Sebelius Ignores Higher Premiums, Defends Obamacare's "Cost Saving" Provisions

Health and Human Services Secretary Kathleen Sebelius has been doing her best recently to make the case that the Affordable Care Act is, well, making care affordable.

The problem is, it hasn’t, a fact which somewhat complicates Sebelius task. Nevertheless, she gives it the good ol’ college try in a Washington Post op-ed last Thursday.

The article, entitled “The Affordable Care Act, helping Americans curb health care costs,” explains a very real problem and gives three very bogus solutions contained in Obamacare. “The rising cost of health insurance coverage has imposed a heavy burden on our nation,” Sebelius rightly states. “Over the past decade, insurance premiums for working families have growth three times faster than have wages.”

 

We all know the problem. The real question is what Obamacare is doing about it. And on that issue, Sebelius’ op-ed offers very little. In fact, despite the op-ed’s title and claim that “one of the major reasons we passed the Affordable Care Act was to bring down costs” (coincidentally, what are the other reasons?) it doesn’t really have all that much to say.

Reason’s Peter Suderman breaks it down nicely:

“You’ll notice, however, that there’s something missing from the op-ed: any mention of actual health insurance premium prices. That’s not particularly surprising, I suppose, given that the premise of the piece is that the law helps make health care cheaper, yet since the law passed, family health insurance premiums have risen substantially faster than in the years before the law went into effect, rising nine percent following several years of three to five percent rises.”

That translates into a $2,393 increase in premiums for the typical family – almost the mirror image of Obama’s oft-cited election-year promise to “bring premiums down by $2,500 for the typical family.

(Interesting aside: According to Kaiser Health News, the Federal Employee Health Benefits program, the model that Republicans, led by Paul Ryan, used to develop their own health care reform plan, saw premiums go up 3.8 percent – 42 percent less than Obamacare.)

Since Sebelius can’t actually point to hard and fast numbers, she instead decides to describe three of Obamacare’s “cost-saving” provisions. Let’s take a quick look at them in turn.

First, she argues that “insurers could get away with huge premium hikes because there was little transparency or accountability.” Funny, we thought it had something to do with the underlying cost of health care (especially considering that health insurance companies had a lowly 2.2 percent profit margin in 2009). To solve this Obamacare instituted price-controls, er, I mean “rate reviews,” the same type of thing that nearly destroyed Massachusetts’ health care market.

To further get at the problem Sebelius touts the new “minimum loss ratio” to make sure insurers are using at least 85 percent of their money on health care. The problem, as we’ve written about before, is that the ratio simply incentivizes premium increases in order to meet the arbitrary ratio (and does nothing about ensuring quality).

Realizing that insurance is not the entirety of the problem Sebelius also writes that the “Affordable Care Act gives us tools to reduce costs by promoting better health and providing better care.” Her primary example is a new focus on prevention because “we know it is far less expensive to prevent disease than to treat it.” Except we don’t know that at all. In fact, the CBO’s Doug Elmendorf argues it is just the opposite. “Although different types of preventative care have different effects on spending, the evidence suggests that for most preventative services, expanded utilization leads to higher, not lower, medical spending overall,” Elmendorf argues.

If this is really the best that Sebelius can do perhaps it’s time to just change the name of the law to something like “The Making Care Less Affordable Act.” Doesn’t quite have the same ring, but at least Sebelius wouldn’t have to write these phony op-eds.