Obama touts California as health-care reform model. Will costs really fall?

The impact of President Obama's health-care law on medical costs is hotly debated. On Friday, he argued his side, highlighting trends in a state where premiums by some measures may not change much.

By , Staff writer

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    US President Barack Obama speaks during a visit to San Jose, California, June 7.
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President Obama used a visit to California Friday to promote his health-care reform law as widening access to affordable insurance.

Critics, however, say the law will push health premiums up, not down, and many Americans appear to share that worry.

The debate is complicated, and it may still be early to discern the impact of the Affordable Care Act (ACA) impact on medical costs. The impact will differ somewhat from state to state, for one thing. And since the law says insurance must cover a fuller array of medical services, the product is changing – not just its price.

Recommended: How much do you know about health-care reform? Take our quiz!

On Friday, Mr. Obama was clearly trying to shore up his side of the debate, highlighting trends in a state where premiums by some measures may not change much.

“You can listen to a bunch of political talk out there – negative ads and fear mongering geared towards the next election – or alternatively, you can actually look at what’s happening in states like California right now,” Obama said in remarks delivered in San Jose.

His words come at a time when public skepticism about the ACA, also known as Obamacare, has grown.

A new NBC News/Wall Street Journal poll finds 49 percent calling the law a “bad idea,” according to the website PollingReport.com. That’s a higher share than in 17 previous times when the question was asked. Some 37 percent, meanwhile, called the law a “good idea.”

And in a Christian Science Monitor/TIPP poll last month, 40 percent of Americans said their view of the law has grown “more negative” over the past year, compared with 15 percent whose view has become more positive.

The Monitor/TIPP poll asked people specifically about costs. About 6 in 10 said they expect health insurance premiums to “increase significantly.” Just 7 percent expect the law to bring premiums down considerably, and 25 percent expect essentially no change.

California has emerged as a potential success story of Obamacare, in part because as America’s most populous state, it has a number of competing health-care insurers. Individuals shopping for insurance on California’s new “exchange,” or marketplace, will have 13 providers to choose from – an unusual degree of choice.

Obama noted Friday that the state has also embraced the opportunity to set up the exchange – and to promote its use to residents. That’s in contrast to a number of states that are taking little action to implement this provision of the ACA, deferring to the federal government the task of setting up exchanges for their residents.

In California, Obama implied, costs will be well contained.

“It turns out we’re actually seeing that in the states that have committed themselves to implementing this law correctly, we’re seeing some good news,” he said. “Competition and choice are pushing down costs in the individual market just like the law was designed to do.”

Critics of the law say an individual buying insurance will actually see premiums go up, in California and most of the United States. (Some have accused the White House of using flawed statistics regarding California.)

A study commissioned by Center Forward, a centrist political group, looked at six other states: Arizona, Florida, Illinois, New Jersey, Ohio, and Wisconsin. The study estimated that premiums will rise in five of those states, by anywhere from 15 to 60 percent, due to Obamacare. The study said that in New Jersey, which already has rich mandated benefits, premiums could fall by as much as 25 percent.

The impact of Obamacare will soon become a matter that can be observed rather than predicted. The law’s requirement that individuals have insurance, or pay a tax penalty for being uninsured, goes into effect in 2014.

An important premise of the law is that insurers will be able to hold premiums down if millions more Americans – especially young ones whose health-care needs are relatively small – sign up for insurance.

A potential catch in that logic: If premiums in 2014 start out high, then fewer of those young people may buy insurance, and more may choose to pay the penalty instead.

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