Each of the following widely publicized statements about the Affordable Care Act are not true:
- HealthCare.gov’s web site problems were just a glitch
- “70% of consumers are receiving a subsidy”
- “The Bronze plan covers 60% of expenses”
- “The average cost of a Silver plan for a 40 year old is…”
- “People’s policies were canceled because they were junk policies”
What they all have in common is the power of propaganda messaging to spin a story, typically for political purposes.
The launch of the Affordable Care Act, in the fall of 2013, came with much fanfare but also the failure of both Federal and state exchanges that were not working properly.
The Federal government’s HealthCare.gov web site failed at start up and was frequently down or inaccessible. The White House propaganda was that this was a “glitch”. In fact, HealthCare.gov was experiencing a “catastrophic system failure”, not a “glitch”.
In my state, Oregon, Cover Oregon was a total failure, never enabling even a single consumer to enroll themselves. The disastrous failed project was eventually shut down, as was also Cover Oregon. About $450 million was spent on Cover Oregon including software development, marketing and administration. In spite of its catastrophic system failure, it too was frequently referred to early on as experiencing “a glitch”.
Taking control of the language itself is a standard method of propaganda. Media reporters went along with the “glitch” meme, softening the description of what actually occurred (system failure). In this way, the propaganda efforts were successful – convincing the public that the catastrophic failures were mere “glitches”.
“70% of consumers are receiving a subsidy”
The above is an actual quote from a public media report. Depending on the state you are in, the value quoted is typically between 70% and 90%. The problem is not the specific percentage number – the problem is the omission of key qualifier. The quote should be “70% of those who bought policies on an Exchange are receiving a subsidy”.
By leaving out this qualifier reporters give the false impression that 70% to 90% of the nongroup ACA market receives a subsidy, when in fact, a majority of the nongroup ACA market does not receive a subsidy. You would not know that from news reports, however.
The nongroup/individual ACA market consists of two components:
- Those who buy policies on a Healthcare Marketplace “exchange”
- Those who buy policies directly from insurance companies and do not use the exchanges.
Those who are not eligible for subsidies have no reason to purchase policies through the government run exchange.
Second, the original design of the ACA was that about half of all consumers would receive a subsidy and half would not. This value was rounded by setting the subsidy cutoff to “400% of the Federal poverty level”. After rounding, in the real world, a little less than half of all nongroup ACA purchasers receive a subsidy, and a little more than half (the majority) do not receive a subsidy.
An accurate statement would say any of the following (based on actual numbers for my state, Oregon):
- “70% of consumers purchasing on the Exchange received a subsidy”
- “40% of all nongroup consumers received a subsidy”
- “60% of all nongroup consumers did not receive a subsidy”
Propagandists spun the story to use the larger number, minus the important qualifier “purchasing on the Exchange”. The propagandists are public relations staff who work for the state or Federal exchanges or agencies and they have an incentive to make their work look better than it actually is. In some cases, reporters are naively quoting the PR press release, while others may be intentionally misleading (the case of one reporter I contacted).
“The Bronze plan covers 60% of expenses”
One need not look far to read this quote or the related quotes:
- Bronze plan covers 60% of expenses
- Silver plan covers 70% of expenses
- Gold plan covers 80% of expenses
- Platinum plan covers 90% of expenses
None of those statements are true!
CMMS public relations staff and news reporters simplified the actual statements in to oblivion! The percentage figures are actuarial terms referring to sample populations and DO NOT APPLY TO INDIVIDUALS.
Specifically, for a specific population of people (say a group of 1,000 people), all of whom are on a Bronze plan, the plan is expected to pay an average of 60% of the TOTAL COSTS of this sample population. This figure has nothing to do with an individual.
The statement that a “Bronze plan covers 60% of expenses” is proven false with a simple example. All ACA plans have a “maximum out of pocket” limit. For a typical Bronze plan, the maximum out of pocket cap is set to around $7,000 per person (at time of this writing). Now, suppose you have $100,000 in expenses with a maximum out of pocket cap of $7,000: You pay (roughly) $7,000 and the insurer pays $93,000.
In that case, the Bronze plan has covered 93% of your expenses. QED: The “Bronze plan covers 60% of expenses” is false.
Why this Error?
The propagandists, in this case, seemed to have simplified the facts to make them “easy to understand”. Except they simplified into an incorrect statement that sounded “close enough”.
A side effect of this error is that many people may be purchasing the wrong insurance plan for their needs.
Because of the maximum out of pocket cap, for those with few expenses or those with very high expenses, the best “deal” is to purchase the lowest cost Bronze plan. This sounds counter-intuitive, and it is when applying “old rules” to insurance; but under the new maximum out of pocket cap, the old rules no longer apply.
“The average cost of a Silver plan for a 40 year old is…”
Each year, as insurance companies file new rate hikes in their states, then as the rate hikes are approved by regulators and then when the market places open on November 1, media stories will quote “the average cost of a Silver plan for a 40 year old“.
This quote is misleading, at best, and is basically a lie. The quote is used because age 40 sounds like a midpoint of the age range (it’s not) and the dollar value quoted implies a typical average premium price.
Prices from age 21 to age 40 are nearly flat. Immediately after age 40, prices increase at an exponential rate up to age 64. The age 40 rate quote is not indicative of average prices in the nongroup ACA market. In fact, age 40 is not even the midpoint of the age range! Age 43 is the midpoint of age 21 through age 64.
The age 40 quote is a deliberate intent to mislead the public about annual rate hikes. The age 40 quote falsely portrays lowers costs than exist in the market. Insurance rates are nearly flat from age 21 to age 40 but you would be unlikely to know this. (The above age rate multiplier table was found in an Appendix to the rate hike filing of Providence Health in Oregon, for year 2016 rates. A similar chart appears in pre-ACA HHS/CMMS reports as their expected curves for the ACA.)
Additionally, the news media compares last year’s 40 year old quote to this years 40 year old quote. In real life, last year’s 40 year old is 41 years old this year. Because the ACA discriminates mostly on the basis of age (and smoking status), as one grows older, particularly by age 50 and older, the rates rise 4 to 5% per year even before the annual rate hikes are applied.
The propagandists at the US Department of Health and Human Services created this propaganda meme, deliberately, to mislead the public. There is not any particular propaganda technique in use here other than “intentionally misleading”. The states – and news media – all adopt the age 40 metric and pretended they were informing the public, when they were actually misleading the public. From this standpoint, this has been a very successful propaganda campaign.
The State of Oregon’s, Oregon Insurance Commissioner agrees with my assessment that the age 40 metric is misleading. Beginning with 2016, they are issuing quotes for age 21, age 40 and age 60 to better reflect the range of prices. They would ideally draw a chart with a thick vertical line at each age, to indicate the range of prices; however, they lack automated tools to collect and collate all the rate filings to create this chart in a simple way.
“People’s policies were canceled because they were junk policies”
In the fall of 2013, many people with individually purchased insurance received cancellation notices from their insurance companies. This was at odds with the claim that “If you like your health plan, you can keep your health plan”. The Administration knew that 8-10 million plans were likely to be canceled but chose to hide this fact in order to sell the public on the Affordable Care Act in 2010.
At the time of the policy cancellations in late 2013, the White House directed proponents of the ACA to write in social media and newspaper comments that people were merely losing their “junk policies” which would be replaced by “quality, affordable health plans”.
In reality, almost all of the then existing individual market had traditional “major medical” insurance policies that were anything but “junk policies”. These policies were equivalent to employer sponsored insurance that had served the country well for many decades (and which continue to serve as employers with more than 100 employees are exempt from specific plan coverage requirements under the ACA).
The term “junk insurance” was previously used to describe very limited policies, such as those with a maximum pay out of $50,000 or $100,000/year. The original “junk insurance” name was co-opted by the White House and falsely applied to individual or non-group market as a propaganda response to the reality that millions of policies were being canceled.
This propaganda method used name calling – asserting that people who lost their policies had “junk policies”, which of course, was not true at all. This propaganda later devolved into outright lies when Sen. Harry Reid said that stories of those being treated for cancer and losing their health insurance were all a “bunch of lies”. (As someone who had been – incorrectly – diagnosed with having a tumor and told to undergo urgent surgery the same week my insurance was canceled by the ACA in late 2013 – Sen. Harry Reid is a mean spirited arrogant liar.)
Propaganda has played a critically important role in shaping the public’s perception of the Affordable Care Act. Unfortunately, much of the propaganda messaging – from the initial sales pitches (“If you like your health plan, you can keep your plan”, “You can keep your doctor”) were intentional lies.
After the launch of the ACA, government officials continue to use a variety of propaganda methods from merely misleading to the continued use of outright lying. (Update) In the summer of 2016, we learned that 5 entire states and 31% of US counties will have only one insurer offering policies. Responding to this news, a public relations liar for the US Department of Human Resources said, incredibly, that ObamaCare has increased the number of insurance choices for consumers …. down to 1?
FYI – I studied the ACA extensively, including reading about 100 peer reviewed published papers in health policy and health economics, and much of the ACA itself. What I learned in doing this is that (a) most news coverage of the ACA is riddled with errors about the ACA, (b) the nongroup ACA market is about 10% of the population and about 90% are mostly unaffected and what they think they know about the ACA is almost always wrong (because of (a)).
I have written a paper on why the non-group ACA market insurance premiums are, in many states, climbing by high double digit percentages every year. In fact, in Oregon, the average rate hikes have exceeded 10% every year, starting with the hike from 2014 to 2015 and then 24.4% for 2016 and 25% for 2017. With rates increasing each year, more than they did the year before, this turns into an exponential trend line that is not sustainable. (Obama had said “the era of double digit annual rate hikes are over”, which was another lie used to sell the ACA.)
Please read my paper for more details. The basic problem is the risk pools are badly broken. If no change is made, the ACA collapses. Read the paper for the details, evidence and suggestions for how to fix the problem. The root cause issue is that the ACA turned the pre-ACA individual or nongroup market into a de facto high risk/high cost insurance pool. This is fixable but only if policymakers demonstrate leadership – so far they have not – and if they do not address the problem urgently, the ACA’s nongroup markets collapse. See the paper for excruciating details and extensive references.
Update March 2017: The items I describe in the paper are now commonly accepted as true. Many more stake holders, including insurance company CEOS, and data – such as 2017 having 4% fewer ACA enrollees than 2016 – confirm the findings of my paper. The State of Oregon acknowledges that the ACA market is no longer sustainable and has formally put together some proposals, including several that overlap my recommendations.