Health Care Half-Truths from Senator Pryor

Published August 26, 2014

Opportunity Lives

Defenders of the Affordable Care Act (ACA) — Obamacare — are energized by a recent political ad run by Arkansas Democratic Senator Mark Pryor in his reelection campaign against Rep. Tom Cotton. The ad touts the supposed benefits of Obamacare by claiming the law “prevents insurance companies from canceling your policy if you get sick, or deny coverage for preexisting conditions.”

The ACA’s defenders are excited by this development in part because of the novelty of it. Sen. Pryor is a vulnerable Democrat from a state that leans conservative and where President Obama suffers from very low approval ratings. Other vulnerable Democratic senators in similar situations are keeping as much distance as they possibly can from both the president and the ACA.  So Sen. Pryor is definitely heading down a road less traveled.

The law’s defenders are taking the issuance of the ad as a sign that perhaps the law is turning a political corner. Yes, the law is unpopular with voters, but that’s only because of its close identification with an unpopular president, they say. When the law’s individual provisions are properly described and sold to voters, attitudes toward it shift in a dramatically positive direction. The implication is that the law’s unpopularity isn’t rooted in rational analysis by the electorate. It is based entirely on a massive disinformation campaign orchestrated by the president’s opponents.

Or so we are told.

But this is just another instance of wishful thinking by the law’s supporters, based on the half-truths they like to tell themselves about what the law will mean for health care and the national economy.

The Pryor ad is focused solely on just a couple of the law’s insurance regulations. The ACA prohibits insurers from excluding pre-existing conditions from the products they sell, and it stops the practice of insurers rescinding policies based on the health status of a customer.  It is no surprise that these kinds of provisions are popular with the public. But they are very minor in the overall scheme of Obamacare, and can only be properly understood when connected to the other provisions included in the law that are much less popular.

For starters, the Pryor ad does not mention the canceled policies the ACA required. Plans previously sold in the individual market that did not comply with the law’s many regulations were forced to close and push their customers into the new Obamacare exchanges. President Obama tried to clean up the mess created by these cancelations by saying the federal government would look the other way if states allowed these policies to reopen for a year. Arkansas, however, did not allow these plans to reopen, so thousands of the state’s residents lost their previous insurance plans because of the ACA. Some ended up in new insurance plans, of course, because they had no choice. But many would have preferred to keep their old coverage.

The ACA’s insurance regulations — aimed generally at forcing insurers to charge the same rates to all customers based on their health status, and requiring insurers to take all comers when they offer products in the market – provide a powerful incentive for consumers to forgo buying insurance until they need it. After all, they can always get insurance with no penalty shortly after realizing they need significant medical care. To counteract this incentive, the law imposes an obligation on all Americans to buy government-approved insurance. This is the so-called individual mandate that is among the least popular provisions in the entire law. Sen. Pryor’s ad says nothing about this, of course.

The Congressional Budget Office (CBO) issued a study in January of this year that estimated the ACA will reduce the size of the U.S. workforce by 2.5 million people over the coming decade. These jobs will be lost because the ACA increases the cost of labor, thus forcing employers to rethink their staffing plans and inducing many workers to rely more on public assistance instead of their own earnings.  About 25,000 Arkansas citizens will drop out of the labor force over the next ten years because of the ACA.  Sen. Pryor made no mention of this in his ad.

Further, the ACA paid for its massive increase in public expenditures — $1.8 trillion over a decade, according to CBO – in part with Medicare cuts exceeding $700 billion over the same period.  Among the cuts in Medicare are deep reductions in payments to Medicare Advantage (MA) plans.  Today, about 107,000 Arkansas seniors rely on MA plans to provide their Medicare services, according to a study produced by the American Action Forum.  The ACA is cutting payments to the plans serving these seniors by about 13 percent compared to pre-ACA law.  This cut will result in reduced benefits and higher costs for these seniors.

In poll after poll, going back four years, far more Americans oppose the ACA than support it, and the opposition is far more intense than the support.  The average margin in these polls has been about 12 percent.  The public isn’t opposed to the ACA because they don’t understand it, as the law’s defenders are trying to claim (yet again).  They oppose it because they know exactly what it means, for them and for the country.  The law gives massive new authority to govern the health system to the Department of Health and Human Services.  Most Americans rightfully see that as a very unwise move.  A few political ads, reciting half-truths about what the law will mean for voters, are unlikely to sway them from that view.

James C. Capretta is a senior fellow at the Ethics and Public Policy Center.


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