Right-wing media misinformer Watchdog.org is pushing fabricated myths about the Affordable Care Act (ACA) into the media discussion, stoking fears the program will lead to higher premium costs and create incentives for people to avoid marriage. In reality, tax credits have kept premiums affordable for young people and have not created fiscal deterrents to marriage.
Myth #1: Premium Costs Will Rise Across The Country
Watchdog.org: "Obamacare Will Cause Costs To Decline In Only Five States." Using a study by the conservative Heritage Foundation which found that premium costs in the exchanges will rise for most Americans under the ACA, Watchdog.org claimed that only five states will see a decline in costs:
For a law that was literally and figurative sold to the American people as promising "affordable" health insurance, the Affordable Care Act doesn't seem to be keeping up its end of the promise.
Though the department has avoided providing cost comparisons, the Heritage Foundation, a conservative think tank, did their best to crunch the numbers based on the current costs of insurance through nongroup plans (the closest equivalent to the Obamacare exchanges that existed before Oct. 1) in each state and the average costs for insurance through the exchanges.
According to their data, Obamacare will cause costs to decline in only five states. [Watchdog.org 10/22/13]
Reality: Heritage Foundation Study Fails To Take Into Account Cost-Saving Subsidies
Huffington Post: "The Heritage Analysis Is Deceptive Because It Does Not Factor In Substantial Premium Subsidies." According to an op-ed by Ethan Rome, executive director of Health Care for America Now, on the Huffington Post, the Heritage Foundation study is flawed because it does not factor in tax credits that many exchange customers will access to make coverage more affordable:
The Heritage analysis is deceptive because it does not factor in the substantial premium subsidies most consumers will receive to help them pay for their insurance. Heritage simply pretends these subsidies, in the form of tax credits, do not exist. Leaving out the most important factor in this equation is precisely how the "Heritage Health Insurance Microsimulation Model " reached a conclusion that supports the political agenda of Republican extremists who can think of no domestic policy other than attacking the ACA.
Unlike Heritage, consumers won't pretend the tax credits don't exist. The premium subsidies are a big reason ACA coverage will be affordable. For example, while the premium for a particular plan may be $241 a month, the cost to the consumer after applying the tax credit may be only $143 a month. That's a huge difference. [Huffington Post, 10/21/13]
Tax Credits Will Help A Majority Of Uninsured Exchange Shoppers And Should Be Included In Cost Calculations. According to Talking Points Memo, tax credits should be included in premium cost calculations because they will be provided to a majority of those shopping for insurance on the exchanges:
Under Obamacare, the sticker price for insurance isn't what most people are going to actually pay. The law offers tax credits, on a sliding scale, for people making between 100 and 400 percent of the federal poverty level. According to estimates from the Kaiser Family Foundation, more than half of uninsured Americans have an income within that range.
Another 38 percent fall below the poverty line. They are supposed to be eligible for Medicaid under the law, and millions in poverty will be covered that way. However, more than 20 Republican states -- with an assist from the U.S. Supreme Court -- have refused to expand Medicaid coverage to them. So people in those states are admittedly out of luck, but that wasn't the ACA's intention.
That leaves only 10 percent of uninsured Americans who make above 400 percent of the poverty level and, as the law was conceived, would be paying the premiums that Heritage highlights in its analysis. [Talking Points Memo, 10/21/13]
Myth #2: Young People Will Not Sign Up Because Of Costs, Would Rather Go Without Coverage
Watchdog.org: "Some Pretty Good Evidence That Young People Wouldn't Be Flocking To The Exchanges" Even If They Worked. Watchdog.org claimed there were indications that young people would not sign up for the ACA on the exchanges due to rising costs:
But there already is some pretty good evidence that young people wouldn't be flocking to the exchanges even if they were in good working order. And that's a big deal, because the arithmetic behind Obamacare requires that lots of young, relatively healthy people buy insurance and effectively subsidize the cost of the older, less healthy, more expensive people in the system.
As Cathy Reisenwitz wrote last week, this is why the whole scheme shouldn't be called insurance at all - because it's really cost-pooling.
And why are lots of young people not showing up for Obamacare? Refer back to the first point. While all adults will see higher premiums in most states, the increases are generally sharper for young people. [Watchdog.org 10/22/13]
Reality: Young People Want Insurance And Largely Qualify For Tax Credits That Will Make Coverage Affordable
CNN Money: "Only 5% Of [Millennials] Claim They Do Not Want Or Need Health Insurance." According to an October 21 CNN Money op-ed piece by Matthew Segal, president of OurTime.org, a group dedicated to enhancing the voice of young Americans, polls have found that only 5 percent of young people say they do not want or need health insurance:
There are currently 17 million uninsured Millennials now eligible to get health insurance through the Affordable Care Act. Only 5% of them claim they do not want or need health insurance, according to some polls.
In other words, despite what the opt-out crusaders might lead you to believe, young people aren't so foolish to think they will never get sick, fall down, become pregnant, develop a food allergy, or face any other spur-of the moment illness, which can cost thousands of dollars. Let's not forget that more than 50% of all personal bankruptcies in the pre-Obamacare world were due to unforeseen medical expenses. [CNN Money, 10/21/13]
The Washington Post: "90 Percent Of Uninsured Young Adults Will Qualify For [ACA's] More Generous Subsidies." According to Washington Post's Wonkblog, 90 percent of uninsured young adults will qualify for tax credits:
To start, about 90 percent of uninsured young adults will qualify for the law's more generous subsidies. Census data shows there are about 11 million Americans between 20 and 29. Eight-seven percent of them have incomes below 400 percent of the federal poverty line, meaning they will qualify for some level of a tax subsidy or for the Medicaid program.
The bar on the far left represents the 4.83 million young adults who earn less than 138 percent of the federal poverty line and will become eligible for Medicaid. That entitlement program does not use the age rating provisions used in the private market, meaning that one-third of young adults won't interact with this part of Obamacare in any way.
The three bars in the middle show young adults who will become eligible for subsidies under the Affordable Care Act. Those subsidies will cap the young adults spending on health insurance as a percent of income. Let's take an individual who earns $22,240, which works out to 200 percent of the poverty line. That person would get enough tax subsidies so that, at most, he was spending $1,407 annually on health insurance (a $117 monthly premium). [The Washington Post, 2/11/13]
MSNBC: Choosing To Pay The Penalty Instead Of Purchasing Insurance Makes Little Financial Sense. An August 9 MSNBC piece on the benefits of younger, healthy Americans purchasing insurance explained that most young Americans will qualify for subsidies to make their insurance more affordable and that passing on a health care plan could leave them subject to "financial ruin" if they need serious medical care:
Obamacare also uses tax credits to discount most young people's coverage. Anyone with an income between 100% and 400% of the federal poverty level ($11,490 to $45,960 in 2013)--which is to say the vast majority of healthy young adults--will benefit accordingly. In Los Angeles, a 25-year-old man earning $17,235 will pay $34 per month for silver-level coverage next year. That's 80% less than the same coverage would cost without the discount ($174 per month).
Suppose that young man heeds the FreedomWorks call to action. By passing on the health insurance and paying a penalty of $27 per month (the fixed rate for anyone making less than $32,500), he'll save himself a grand total of $7 per month--the price of a turkey sandwich.
He may really want the sandwich, but he should understand that it's not a free lunch. He's actually choosing between two purchases. He can pay $27 a month for... nothing. Or he can pay $34 for a health plan that provides ready access to primary care and could spare him financial ruin if he suffers a serious illness or injury. "It usually costs a little more to buy the plan than pay the penalty," says Jay Angoff, the Washington-based attorney who oversaw the initial rollout of Obamacare for the Department of Health and Human Services. "But if you look at what you're getting in return, there's no contest. For most people, paying an extra few bucks a month to get health insurance is the rational choice." [MSNBC, 8/9/13, emphasis added]
Myth #3: Structure Of ACA Subsidies Will Deter Marriage
Watchdog.org: Because Of The ACA, "People May Have A Pretty Good Incentive To Avoid Things Like Marriage And Job Promotions That Pay Them A Higher Salary." According to Watchdog.org, the way subsidies are structured under the ACA -- higher subsidies for individuals making less income -- will encourage people to avoid getting married and combining incomes:
Because of how the subsidies in the Affordable Care Act are structured, people may have a pretty good incentive to avoid things like marriage and job promotions that pay them a higher salary.
"The tax credits in Obamacare are structured in such a manner that a newly married couple may be surprised by a huge tax bill, due to the marriage penalty in the law," said Josh Archambault, a senior fellow with the foundation. "The couple will be making no additional money, but their marriage certificate paper can result in a multi-thousand dollar drop in their credit." [Watchdog.org 10/22/13]
Reality: Subsidies Are Targeted To Uninsured Individuals Because Married Couples Are More Likely To Have Coverage
Think Progress: ACA Will Not Deter Marriage Because Individuals Have Often Gained Coverage Through Marriage. According to Think Progress, providing subsidies for coverage to individuals makes sense because they are more likely to be uninsured, while married couples "benefit from economies of scale" and are more likely to have insurance:
The affordability credits are pegged to the federal poverty guidelines, which treat married people as a unit and view individuals as separate parties filing separate tax returns. These guidelines assume, as Judith Solomon points out, that "people benefit from economies of scale when they're living together" and recognizes that unmarried individuals have fewer resources (lower incomes, more money spent on basic necessities) than married families. In fact, since the majority of the uninsured are not married and marrying lowers uninsurance rates, providing more subsidies to individuals is a better way of targeting affordability credits to those who need them most. [Think Progress, 10/27/11]
Married People Are More Likely To Have Insurance Than Single People. According to 2009 Census data compiled by Think Progress, married individuals are more likely to have insurance when compared to single people.
[Think Progress, 1/15/10]
New Republic: Married People Receiving The Same Benefits As Single People Would Give Couples A Distinct Advantage. According to the New Republic, fixing the "marriage glitch" by making subsidies consistent across marital status would penalize single people compounding the economic advantages of cohabitation and ignores the reality that single people have more trouble affording health care:
The report highlights the fact that two single adults who live together without getting married can in many cases receive a higher subsidy than if they are married. But, as the [Joint Committee on Taxation] notes, this arises because the U.S. poverty line calculations assumes that two individuals living together can live more economically than separately residing adults. This assumption happens to be correct. As a result, any system which "fixed" this marriage penalty would have two fundamental flaws:
First, it would impose a "singles penalty". If married couples received subsidies which were twice those received by singles, then they would end up much better off than singles living alone, because of the economies of living together. In order to equalize the situation for the minority of singles who live with a partner, any fix would be massively unfair to the majority of singles who live without a partner.
Second, the committee ignores the fact that, to the extent that affordability problems remain under the ACA, it is singles who face the largest affordability problems. As I have shown in analysis for the Commonwealth Fund, while affordability is in general good for all groups under the ACA, it is worst for singles. So any fixes that reward married couples over singles would only serve to make that disparity worse. [New Republic, 10/30/11]