The world was supposed to end in 2012 according to various misinterpretations of Mayan culture. Then, when time kept ticking along into 2013 the doomsday preachers had to recalculate. Recently, there was news that a group called the Sword of God Brotherhood has changed humanity’s end date to January 1, 2017.
History tells us two things about these Cassandras who give us specifics about the Apocalypse: one, they are always wrong, and, two, being wrong will not dissuade them from making more predictions.
The same holds true for those partisans prophesizing the end of Obamacare. We were told that the Supreme Court would toss out the law; that insurance companies would set astronomical premiums, that businesses would drop insurance in droves, that young people would show no interest in subsidized plans, and that death panels would dispatch the elderly. Again and again these prognostications proved false.
The latest Chicken Little is Stephen Parente, a former advisor and to John McCain’s 2008 presidential campaign and an inveterate Affordable Care Act critic. Parente has managed recently to get the same basic article published in a number of newspapers around the country (many, not surprisingly, in states with contested U.S. Senate races) in which he forecasts a new date for Obamacare’s demise. Perhaps coincidentally, Parente joins the Sword of God Brotherhood in predicting that the end will come in 2017. Don’t say you weren’t warned.
But once you start digging into Parente’s analysis you see that it’s full of holes and strange assumptions.
Take, for example, his discussion of the tax credits that Obamacare provides to people of low and modest income. Parente notes that many people purchasing insurance coverage receive help paying premiums through a federal subsidy. These subsidies will allow more people to get insured in the short term, he says. But, he claims, the value of the tax credits will dramatically erode going forward, which will quickly drive up the number of people without insurance.
The problem with this argument is that the tax credits do not function like a voucher. Instead, insurance premiums are capped at a percentage of earnings for an individual or family. That means the value of the premium assistance may change slightly but if an individual’s income remains steady then that person will not have to pay much more for insurance over time.
A single 40-year-old woman, for example, earning $25,000 per year would currently need to pay about seven percent of her income toward insurance premiums while a tax credit would cover the rest of the cost. That means she would have to pay about $270 per month for a plan. If her income remains the same then she would continue paying seven percent of her income toward a policy, even if premiums increase.
Another example: Parente asserts that the programs built to protect insurance companies against bad risk will go away in 2017 and this will cause premiums to spike. The problem with this argument is that the particulars of the programs were not fleshed out enough to cause insurance companies to set premiums artificially low. Regulations for these safeguards came late and insurers were unsure that they would make any difference at all. In other words, insurance companies did not lowball premiums in anticipation of a big payout from taxpayers; there’s no need for a spike.
Simply put, Parente is just the latest in a long line of health reform doomsayers who have turned out to be wrong. But you don’t have to believe me; instead just check out the market that folks like Parente usually profess to hold so dear. Here in North Carolina, UnitedHealthcare recently announced that it will begin offering subsidized plans next year. In other words, the nation’s largest insurance company is wagering a lot of money that Parente is another misguided, ideological prophet of disaster.
That’s probably a safe bet.
Adam Linker is a Health Policy Analyst at the North Carolina Justice Center.