Fox News' America's Newsroom opened today with a segment covering a new Kaiser Family Foundation study that found that health insurance premiums are 9 percent higher this year than last year. Guest Charles Payne of the Fox Business Network tried to portray this increase as a result of the Affordable Care Act, and then at the very end of the segment host Bill Hemmer finally reported the facts: Only about 1.5 percentage points of the increase are related to provisions of the ACA, as reported by News Corp.'s own Wall Street Journal.
Hemmer framed the segment as a "debate over how much of this increase is related to the new health care law." Payne assured him that "there's no doubt, Bill, that a lot of this has to do with the health care law," blaming the law's provisions allowing young people to remain on their parents' insurance plan till age 26 and requiring coverage of preventive procedures. Payne then speculated that insurance companies are raising premiums in anticipation of more provisions of the ACA coming into effect, and Hemmer responded, "This might be only the beginning."
In fact, this trend is not new. Health expenditures have been increasing in the United States since the 1970s and have been shooting up dramatically since the beginning of the 1990s, long before the Affordable Care Act came into being:
Health Spending and Annual Growth Rates:
In addition to higher health spending, the United States is increasing its spending faster than other countries. Exhibit 3 illustrates the trend in health spending among five countries. The United States' higher growth rate in the 1990s and the 2000s ensured that it spent far more than other selected countries. While the United States had a slower rate of growth in the early 1990s, the late 1980s and 2000s were defined by an accelerated growth rate.
Growth in Total Health Expenditure Per Capita, U.S. and Selected Countries, 1970-2008
Payne went on to explain that rising health care costs are contributing to the increase in health care premiums, which is a factor that Kaiser CEO Drew Altman said probably did play a role in the premium increase. Hemmer then reported the fact that the ACA is responsible for "at least one or two percentage points of that increase."
What the segment left out: Altman's statement on the extent to which the ACA contributed to the premium increase:
Critics of the national health reform law passed in 2010 like to blame everything but the weather on "Obamacare," but regardless of how you feel about the Affordable Care Act, its effect on premiums this year is modest. Most of the law's provisions don't go into effect until 2014. The two biggest changes this year allow young adults up to age 26 to stay on their parents' insurance policies and require some insurance plans to cover preventive services at no cost to patients. These are popular provisions that provide real benefits, and combined they account for about one to two percentage points of this year's premium increase.
The segment also made no mention of an analysis of the study results from Nancy-Ann DeParle, Obama's deputy chief of staff, in which she explained why these findings are a result of faulty predictions:
These premiums were generally set in 2010, when insurance companies thought medical costs would be significantly higher than they turned out to be. The Bureau of Labor Statistics found that the health insurance employer cost index (a measure of the price of health care services) was the lowest it has been in over 10 years in the first half of 2011. Additionally, some insurers assumed that the Affordable Care Act would dramatically raise their costs. In the end, both assumptions were wrong -- but insurance companies still charged high premiums and earned impressive profits.
DeParle also explained that premium growth is expected to slow in 2012, that state-based insurance exchanges that already exist have resulted in falling premium growth, and millions of Americans have already benefited from the ACA, including young adults who can remain on their parents' insurance and individuals whose preventive care is now covered without a co-pay or deductible.