Kathleen Sebelius Would Like You to Believe That ObamaCare Is Responsible For Health Care Cost Savings

In a Washington Post op-ed titled “The Affordable Care Act, helping Americans curb costs,” Health and Human Services Secretary Kathleen Sebelius touts ObamaCare’s alleged cost-control provisions, noting that “one of the major reasons we passed the Affordable Care Act was to bring down costs.”

Sebelius highlights two of the law’s insurance regulations: a medical loss ratio (MLR) rule that requires insurers spend at least 80 percent of premium revenue on clinical services and a rate-review provision which gives her agency the power to deem health insurance rate hikes “unreasonable." These two regulations, which substantially increase the federal government's power and discretion over the entire health insurance market, are “putting consumers back in charge.” (Maybe she meant bureaucrats rather than consumers?)

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. 

But what about those shiny new insurance regulations Sebelius mentions? Aren’t they supposed to have an effect on the cost of care? Given the state-level history with similar rules, I wouldn’t count on it. Prior to ObamaCare, 34 states had some sort of MLR rule in place. But they didn’t contain health spending or improve care. According to a 2009 American Academy of Actuaries report, “minimum loss ratios do not help contain health care spending growth…or address directly the quality and efficiency of health care services.” If anything, MLR rules create an incentive for insurers to increase premiums by limiting the amount of money that can be spent on administrative costs and profits to a percentage of the total premium: Want more money to spend on administrative expenses? Higher premiums are the only way to go. Insurance rate review—essentially an explicit form of price controls—mostly served to make a mess of the Massachusetts insurance market when the state rejected 90 percent of proposed hikes in 2010.

But those two rules aren’t the only supposed savings tricks Sebelius has up her sleeve:

The law emphasizes prevention because we know it is far less expensive to prevent disease than to treat it. Under the Affordable Care Act, many preventive services are available without cost-sharing so patients avoid chronic conditions and the painful and costly complications they often lead to.

Sebelius has tried this line before, but the research disagrees with her claim. According to a 2008 metastudy published in The New England Journal of Medicine, the “vast majority” of preventive measures don’t save money. The Congressional Budget Office, meanwhile, has reported that in fact, government-funded prevention efforts can actually cost more money overall because they don’t have any effective way to target only the narrow slices of the population for whom prevention might actually create savings.

Before ObamaCare was passed, President Obama declared that it would lower the cost family insurance premiums by an average of $2,500. Perhaps understandably, the administration tends not to mention that particular promise anymore, preferring vague pitches that suggest the possibility of savings without pointing to any real numbers about the health insurance market. The possibility of savings is all they really have. And they don't even really have that, because the evidence suggests that the policies the administration is counting on to produce those savings probably won't have the desired effect. 

Previously in "Kathleen Sebelius is wrong about ObamaCare."  

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  •  ||

    RELEASE THE SARCASM!

  • ||

    no, no.

    UNLEASH THE SARKRAKEN.

  • ||

  • Bill||

    Good links to the newsletters and related info.

    Gives the whole text not cherry-picked.

  • ||

    Preventative care = do what the Top Men at HHS tell you to do. It's a means of social control, which explains why liberals love it despite the evidence that it does nothing to save money.

    But now that Obama is proposing a pay raise for long-suffering federal employees (averaging a measley $75 grand in pay), I'm sure the Top Men will, in fact, use their broad Obamacare powers to make us both healthier and wealthier, as Washington has never failed to do.

    http://finance.yahoo.com/news/.....00096.html

  • sarcasmic||

    I predict that before long disobeying the doctor's orders will be a felony.

  • Jeff||

    He's kissing that woman RIGHT ON THE MOUTH!!!!

  • Almanian||

    "....and that's how babies get made. Now, onto prevention of STD's...."

  • rather||

    "Premiums paid by Americans for health insurance from their employers more than doubled in the past decade, according to the Kaiser Family Foundation."

    It's a gouging trend; you can't blame it on ObamaCare, Kathleen Sebelius, her lips, tits, or vagina.

  • ||

    If it were just "gouging" then why would we need the enormous Rube Goldberg contraption called Obamacare?

  • Almanian||

    Once again with the great alt text, Peter!

    Also:

    And they don't even really have that, because the evidence suggests that the policies the administration is counting on to produce those savings probably won't have the desired effect.

    Yepper. That's it in a nutshell. I'd go on a rant about what a lying bag of dicks they all are, but I think we all stipulate that any more....

  • protefeed||

    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.

    To be fair, the rates for health insurance can be extremely volatile. I'm a former health insurance underwriter, and I've seen at least one book of business I underwrote get an average 90% increase one year, followed by a rate decrease of 10% or so (admittedly off of the new 190% baseline).

    I'm sure that Obamacare has caused rates to rise above what they would have been, but in any given year massive swings in trends can mask or amplify such effects.

  • Bill||

    If it is not repealed, just wait a few years and see what rates do.

  • ||

    There is nothing the Left gets such a visceral thrill out of -- such an endorphin release -- as passing a law against their perceived enemies, even if it ultimately backfires.

  • ||

    All I know is that my rates went up about 15% on this first check I've gotten in the new year. My rates were readjusted at the end of last year like every year..

  • ||

    Just as an aside, Obama kisses a lot of women on the lips.

    I'm just sayin'!

    The other day I saw him turn around and kiss Elizabeth Warren on the lips after his speech about the Consumer Finance Protection Agency.

    I've worked with dozens of professional women, some of them for years at a time. Many of them I became very close to. Some of them I've hugged on occasion--and I'm not a guy that's ever been told I was aesthetically challenged or anything...

    But I ain't never kissed a coworker on the lips. Every time Obama turns around, I seem him kissing some woman on the lips.

    And it is kinda weird. He's like the Richard Dawson of presidenz.

    http://www.youtube.com/watch?v=NGpvxicYDFI

  • Tipto Thruda Two-Lips||

    Excellent observation.

    Perhaps it's a Kenyan thing?

  • PR||

    he tried it with Kagan and she gave him the cheek.

  • Skip||

    Maybe its just something rich famous old men do.

  • ||

    I bet somebody could make a really long YouTube video of Obama kissing different women.

    After the speech the other day? He turned around and kissed Elizabeth Warren on the mouth like he was kissing his wife.

    Like that's the natural thing to do?

    You finish a speech, and the first thing you do is turn around and kiss Elizabeth Warren?

    It's weird.

  • Journalists||

    Can't be bothered with anything. Got a GOP primary to cover.

  • KKK||

    We told you this would happen.

  • Jack Thomas||

    After its first year, Obamacare caused private health premiums to jump by 9.5%, an average increase of $1,482 for employer-provided family coverage. Despite promises to bend the cost curve down and lower premiums, Obama managed to reverse a 7-year trend of increasingly smaller yearly premium increases. Forgot the “$2,500 per family per year” that Obama promised in premium savings.

    Learn the lies and the propaganda used to shove Obamacare down our throats. Obamacare: Dead on Arrival is Close Enough for Government Work http://amzn.to/tecVfc

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement