Rate Shock Exposed: 7 Ways Obamacare Sabotage Would Raise Your Premiums

"Rate shock! Premium hikes!" As anyone following the health reform debate knows, it's a favorite line of attack by right-wing opponents of the law -- the same figures who've been obsessed with sabotaging Obamacare implementation at all levels of government, across the states, and via numerous platforms. It's one that is now enjoying renewed play due to the coverage "cancellation" notices sent to people with insurance bought on their own in the individual market, even though that's just a small part of the entire story.

What distinguishes the rate shock message from many other anti-ACA attacks is that it reflects a strategy that goes beyond merely breaking something or gumming up the system. Upon a closer look, it's clear that those rate shock fearmongers' sabotage efforts are the very ones designed to raise health insurance premiums.

This strategy must be exposed. Specifically, here are seven ways that Obamacare's right-wing opponents are trying to create the "rate shock" they want to use to badmouth the law to the American public.

  1. Medicaid expansion. When governors and state lawmakers refuse to expand their Medicaid programs as called for by the Affordable Care Act, it's not just their most destitute constituents, state budgets, or safety-net hospitals that are harmed. Forcing that population, who tend to be less healthy, into the private health insurance markets also raises costs for others buying coverage on their own. In fact, in Texas, the Rand Corporation found that the state's refusal to expand Medicaid will cause private health insurance premiums to rise by 9%. 
  2. Sign-ups and risk pooling. When the ACA Marketplaces launched in October, Obamacare opponents went into overdrive trying to discourage Americans from signing up for coverage and thwarting efforts to inform the public about the law. One group even resorted to a creepy Uncle Sam ad essentially advising young people to stay uninsured and vulnerable to financial ruin, even though this population is actually very interested in getting covered. Moreover, Congressional lawmakers who want to see all of Obamacare struck down are continuing to press for delaying the individual mandate, or the requirement for most Americans to carry health coverage.

    The problem is that the more the risk of health care costs incurred by sick people is spread across a larger population that includes many healthy people, the lower the premiums tend to be. After all, risk pooling is the point of the individual mandate. As such, fewer people signing up for coverage and participating in the risk pool will mean higher premiums for everyone else.
  3. Insurers' rip-off rates. To help states strengthen how they review proposed health insurance premium increases, the Affordable Care Act provides substantial resources for them to do so. However, despite the legal authority of the states to robustly regulate insurance if they so choose, only about half the states have empowered themselves to review and approve or disapprove premium hikes. Florida took the deliberate powerlessness one step further by stripping the state's Office of Insurance Regulation's power to negotiate rates with insurers competing in the federal Marketplaces until 2016.
  4. Competition from Consumer Operated and Oriented Plans. A key principle at work in Obamacare implementation is that the higher the number of insurers competing in a given market, the lower the price of coverage tends to be. In fact, that is exactly what nonpartisan analysis shows: competition among insurers offering coverage through the Marketplaces is driving down premiums. A major way Obamacare opponents are undermining the trend is cutting off seed money loans for Consumer Operated and Oriented Plans, which compete alongside other private plans and helps lower costs, especially in rural areas.
  5. The public option. If health reform had included a public option, all Americans would have an all-American plan available to them no matter where they lived. Moreover, all private profit-motivated insurance plans would be competing against one more plan no matter where they operate, one that serves and is accountable to the American people. Instead, some states are struggling to attract enough insurers to operate and compete against each other there. While 95% of Americans live in areas with at least two insurers in the exchanges, we could have had even more competition.
  6. The real massive tax hike. The truth is that the Affordable Care Act is a massive tax cut for millions of ordinary Americans, as it provides generous tax credits to families and small businesses to make health coverage more affordable. That is why repealing Obamacare would actually be the tax hike that the law's opponents claim to dislike. It's also not just the right-wing members of Congress who are taking a page from this playbook. The Attorneys General in Oklahoma and Indiana are suing to prevent people in their states from receiving the tax credits.
  7. "Hidden cost" passed onto the insured. By covering more of the uninsured population, the Affordable Care Act is starting to remedy many of the problems in our nation's broken health care system -- including a "hidden tax" that Americans pay in the form of higher premiums due to uncompensated care provided to uninsured patients. In 2008, the uninsured received over $110 billion in uncompensated care, which health insurers passed onto their own policyholders. This extra cost is estimated to be $400 for single individuals and $1000 for families. By trying to repeal the Affordable Care Act -- even to the point of shutting down the United States government and risking a global financial crisis -- and now encouraging uninsured Americans to stay uninsured, anti-ACA figures are trying to force people to continue paying this hidden cost.

The reality for millions of Americans is that health plan premiums in the Obamacare Marketplaces are generally affordable or downright cheap. Obamacare opponents want a different scenario, one in which they're raising Americans' premiums and blaming it on the leaders working in good faith to make health coverage more affordable. Where's the outrage?