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Obama to raise premiums


									Print Story: FACT CHECK: Premiums would rise under Obama plan - Ya...

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         FACT CHECK: Premiums would rise
         under Obama plan
         By RICARDO ALONSO-ZALDIVAR, Associated Press Writer
         2 hrs 25 mins ago

         WASHINGTON – Buyers, beware: President Barack Obama says his health care overhaul will lower
         premiums by double digits, but check the fine print.

         Premiums are likely to keep going up even if the health care bill passes, experts say. If cost controls
         work as advertised, annual increases would level off with time. But don't look for a rollback. Instead,
         the main reason premiums would be more affordable is that new government tax credits would help
         cover the cost for millions of people.

         Listening to Obama pitch his plan, you might not realize that's how it works.

         Visiting a Cleveland suburb this week, the president described how individuals and small businesses
         will be able to buy coverage in a new kind of health insurance marketplace, gaining the same
         strength in numbers that federal employees have.

         "You'll be able to buy in, or a small business will be able to buy into this pool," Obama said. "And
         that will lower rates, it's estimated, by up to 14 to 20 percent over what you're currently getting.
         That's money out of pocket."

         And that's not all.

         Obama asked his audience for a show of hands from people with employer-provided coverage, what
         most Americans have.

         "Your employer, it's estimated, would see premiums fall by as much as 3,000 percent," said the
         president, "which means they could give you a raise."

         A White House press spokesman later said the president misspoke; he had meant to say annual
         premiums would drop by $3,000.

         It could be a long wait.

         "There's no question premiums are still going to keep going up," said Larry Levitt of the Kaiser
         Family Foundation, a research clearinghouse on the health care system. "There are pieces of reform
         that will hopefully keep them from going up as fast. But it would be miraculous if premiums actually
         went down relative to where they are today."

1 of 3                                                                                                                      3/17/2010 5:29 AM
Print Story: FACT CHECK: Premiums would rise under Obama plan - Ya...

         The statistics Obama based his claims on come from two sources. In both cases, the caveats got left

         A report for the Business Roundtable, an association of big company CEOs, was the source for the
         claim that employers could save $3,000 per worker on health care costs, the White House said.

         Issued in November, the report looked generally at proposals that Democrats were considering to
         curb health care costs, concluding they had the potential to significantly reduce future increases.

         But the analysis didn't consider specific legislation, much less the final language being tweaked this
         week. It's unclear to what degree the bill that the House is expected to vote on within days would
         reduce costs for employers.

         An analysis by the Congressional Budget Office of earlier Senate legislation suggested savings
         could be fairly modest.

         It found that large employers would see premium savings of at most 3 percent compared with what
         their costs would have been without the legislation. That would be more like a few hundred dollars
         instead of several thousand.

         The claim that people buying coverage individually would save 14 percent to 20 percent comes from
         the same budget office report, prepared in November for Sen. Evan Bayh, D-Ind. But the presidential
         sound bite fails to convey the full picture.

         The budget office concluded that premiums for people buying their own coverage would go up by an
         average of 10 percent to 13 percent, compared with the levels they'd reach without the legislation.
         That's mainly because policies in the individual insurance market would provide more comprehensive
         benefits than they do today.

         For most households, those added costs would be more than offset by the tax credits provided
         under the bill, and they would pay significantly less than they have to now.

         The premium reduction of 14 percent to 20 percent that Obama cites would apply only to a portion of
         the people buying coverage on their own — those who decide they want to keep the skimpier kinds
         of policies available today.

         Their costs would go down because more young people would be joining the risk pool and because
         insurance company overhead costs would be lower in the more efficient system Obama wants to

         The president usually alludes to that distinction in his health care stump speech, saying the savings
         would accrue to those people who continue to buy "comparable" coverage to what they have today.

         But many of his listeners may not pick up on it.

2 of 3                                                                                                                      3/17/2010 5:29 AM
Print Story: FACT CHECK: Premiums would rise under Obama plan - Ya...

         "People are likely to not buy the same low-value policies they are buying now," said health
         economist Len Nichols of George Mason University. "If they did buy the same value plans ... the
         premium would be lower than it is now. This makes the White House statement true. But is it
         possibly misleading for some people? Sure."

3 of 3                                                                                                                      3/17/2010 5:29 AM

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