Texas public policy foundation
The ObamaCare Worm

This article originally appeared in the National Review Online on September 27, 2013.

Health-insurance plans before ObamaCare were like "an apple full of worms," but once ObamaCare is up and running, insurance will be like "an apple that's fresh and delicious." Got that? Full of worms versus fresh and delicious.

So says White House spokesman Jay Carney, who apparently thinks that health insurance before ObamaCare amounted to a massive, rotten swindle.

His attitude is emblematic of the law's champions, for whom high-deductible, catastrophic-health-insurance plans are about as useful as a festering apple. Back in March, Secretary of Health and Human Services Kathleen Sebelius dismissed catastrophic coverage as "mortgage protection, not health insurance."

In other words, the Obama administration thinks health insurance should do more than cover the costs of catastrophic illness or injury, no matter that that's the entire point of insurance, and no matter that over the past decade catastrophic plans combined with health savings accounts have been shown to lower costs without sacrificing health outcomes.

Carney's wormy-apple remark was in response to a reporter's question about why HHS's release this week of data outlining average premium rates in the federal health-insurance exchanges didn't compare exchange rates to pre-ObamaCare rates currently available on the individual market. Instead, HHS compared exchange rates to imaginary rates that the Congressional Budget Office predicted for 2016, and since the exchange rates were a bit lower than the CBO predicted, HHS's press release insisted that "premiums nationwide will also be around 16 percent lower than originally expected."

The obvious reason not to compare ObamaCare exchange rates to pre-ObamaCare rates is that the price is going up - a lot. For example, according to HHS's data, the lowest-cost catastrophic plan for a 27-year-old in Austin, Texas, will be $109 a month on the federal exchange. Compare that to the cheapest catastrophic plan currently available to that same 27-year-old in Austin, which is $55 a month. That's a 98 percent increase.

To put that in context, consider that in a city like Austin there are plenty of single, uninsured 27-year-old freelance computer programmers, waiters, musicians, and artists who make more than $30,000 a year and therefore will not qualify for a subsidy on the exchange, but who will nevertheless have to pay 98 percent more for the cheapest available insurance thanks to ObamaCare.

The administration is at pains to avoid such details because they undermine the argument that ObamaCare will lower premiums for most Americans. In fact, the opposite is true even for a 40-year-old Texan, for whom the average "bronze" plan on the exchange will be 88 percent more expensive than the cheapest plan available prior to ObamaCare.

ObamaCare plans are more expensive because the law attempts to transform health insurance into something that is not health insurance at all but is in fact pre-paid, subsidized health care. It's true that this change will represent some value to some people: Those with pre-existing conditions will not be denied coverage, and the chronically ill will benefit from more generous plans.

But the point of the law is not to make insurance affordable. There were myriad ways to do that, from making insurance portable across state lines, to relaxing restrictions on health savings accounts, to allowing individuals to use pre-tax dollars to purchase coverage on their own.

The law does the opposite, and in the long run works against the very concept of insurance. Contrary to Carney's confused metaphor, ObamaCare itself is the worm in the apple of health insurance, eating it out from the inside with onerous rules, restrictions, and mandates that can only drive costs up for most Americans.

That ObamaCare makes insurance more expensive should not come as a surprise to close observers, who have been saying this would happen for a long time. Now, finally, HHS has released the data to confirm it - even if the administration won't own up to it.

Next week, when the federal exchanges go live and Americans can take a closer look at what they'll be getting for more costly coverage, we'll see just how much the ObamaCare worm has hollowed out the country's health-insurance market.

- John Daniel Davidson is a health-care policy analyst at the Texas Public Policy Foundation and a 2013 Lincoln Fellow.