Note to the White House: Obamacare’s benefits aren’t free

With Republicans hoping to make next year’s election another referendum on the 2010 healthcare law (better known as Obamacare), the White House issued a report Thursday aimed at those calling for the law to be overturned. “Repeal Would Raise Costs, Strip Protections from Families Across America,” the report declares.

As usual, though, the administration left out one no-trivial part of the equation: how much those benefits are costing the public.

The Times’ editorial board has steadfastly supported the Patient Protection and Affordable Care Act, warts and all, because it makes a credible effort to make a more sustainable healthcare system. But it’s disingenuous to pretend that the changes mandated by the law cost nothing or that the benefits it delivers magically arrive for free.

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The question for the public has always been whether Obamacare is worth the price it imposes. Yet that never seems to be what gets debated; instead, opponents seem offended that there’s a price at all, while supporters argue that medical and insurance costs would be rising even without Obamacare.

They’re right about that last point. Medical inflation has outpaced the increase in consumer prices overall for years, although the rate has slowed since the recession. And double-digit increases in insurance premiums were common before the act’s passage. Those factors make it hard to tell just how much of the increase in premiums seen by many Americans was caused by the law and how much of it stems from other factors.

Anyway, the report the White House issued Thursday asserted that healthcare costs would go up if the ACA were repealed. It then lists nine reasons why, including:

• Americans in Medicare or with private insurance plans would lose the free preventive healthcare services mandated by the law. But those benefits aren’t free -- instead of paying for the services through out-of-pocket fees, insurers do so through higher premiums. Proponents nevertheless argue that the costs are minimal because the preventive care averts the need for more expensive treatment later.
• As many as 129 million Americans with preexisting conditions would have to pay more for coverage, if they could obtain it at all. That’s a real benefit for many of them, but the switch away from “medical underwriting” has led insurers to increase average premiums. An analysis by Milliman for the state’s insurance exchange, Covered California, estimates that insurers will raise premiums 14% higher in California for the coming year to account for all the new people they had to offer coverage, a portion of whom will need costly medical care.
• Millions of people who need treatment for mental health problems or drug addiction would lose the improved coverage mandated by the law. But such “essential benefits” required by the act come at a cost; according to the Milliman study, the expansion in coverage will drive up premiums 4.8%.
• Low-income uninsured Americans would lose access to the expanded version of Medicaid offered by half of the states, or to the subsidized private insurance offered through the new exchanges. Of course, the Medicaid expansion and the insurance subsidies are extremely expensive; by the Congressional Budget Office’s reckoning, the gross cost will be almost $1.8 trillion over 10 years (the net cost, which factors in the tax penalties paid by people who don’t carry insurance, is about $1.2 trillion).
• Insurers could restore the annual and lifetime caps on health benefits that the ACA outlawed. But just as they adjusted their premiums to reflect the ban on co-payments for preventive care, so too did they factor the end of caps into their monthly charges. The Milliman study estimates that the various mandates that increase the actuarial value of insurance plans will raise premiums in California by 11.5%
• Clinics and other health centers would lose the grants the ACA made available for expanding or renovating their facilities. Those grants, however, cost the taxpayers billions of dollars.

Of all the items on the administration’s list, only two cited provisions of the law that clearly have been a net winner for taxpayers and consumers. The first is the requirement that insurers spend at least 80% to 85% of the premiums they collect on patient care. That provision, the administration says, saved insurers’ customers $5 billion in its first two years. The second requires drug manufacturers to provide more discounts to Medicare beneficiaries, which the administration says has saved more than 7 million people an average of $1,200 each on prescription medicines.

Again, I’m not arguing that any of the law’s provisions should be repealed. I’m just saying that the law’s supporters should acknowledge that its mandates have a cost, then make the case that the benefits are more than worth it.

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