Truth About Obamacare

Story first appeared in USA TODAY.

Sen. Ted Cruz's 21-hour talkathon and President Obama's joint appearance with former president Clinton will keep FactCheck.org busy for a while, but so far they've seen their share of false, misleading and not-quite-right statements:

• Cruz falsely claimed that the spouses of 15,000 UPS employees will be "left without health insurance" and forced into "an exchange with no employer subsidy." UPS is dropping coverage for spouses only if they can get insurance with their own employer.

• Obama greatly exaggerated when he credited the health care law for bending the cost curve on health care spending. Experts say the down economy is the overwhelming reason that national health care spending has been growing at historically slow rates in recent years.

• Cruz said the "IRS employees union has asked to be exempted from Obamacare." Not so. The union wants its workers to be treated like any other worker with employer-provided health insurance. It opposes a GOP bill that it says, contrary to law, would "take coverage away from employees who already receive it through their employers."

• Cruz said the unemployment rate for black teens "is over 10 times higher than it is for college graduates — 38.2%." True, but that's comparing apples to oranges. The unemployment rate for white teens, aged 16 to 19, is also high, at 20.5%. There's still a racial disparity, but the rate is nearly double, not 10 times higher.

• Cruz cited an outdated quote from Mark Zandi, chief economist of Moody's Analytics, to back up his claim that Obamacare is slowing job growth. Zandi told us the slowdown in job growth at small businesses is "no longer the case."

• Sen. Rand Paul wrongly argued that "everybody is going to pay more" for health insurance under the law. The fact is, some will pay more and some will pay less. Some currently uninsured Americans will pay little or nothing because of the law's expansion of Medicaid.

• Cruz said Obama promised three-and-a-half years ago — in 2010, when the Affordable Care Act was passed — that premiums "would drop $2,500? for the average family by the end of his first term. That's not exactly what the president said or when he said it.

ANALYSIS

Cruz, the freshman senator from Texas, commandeered the Senate floor for 21 hours in a blistering attack on the Affordable Care Act. He even took a swipe at fact-checkers, calling their craft "a particularly pernicious bit of yellow journalism that has cropped up that lets journalists be editorial writers and pretend they are talking about objective facts." That's his opinion, and he's entitled to it. But, as Daniel Patrick Moynihan said, people are not entitled to "their own facts," and that would include Cruz and Obama.

So, let's see how they did in sticking to the facts.

UPS SPOUSES 'LEFT WITHOUT HEALTH INSURANCE'?

Cruz, whose speech began the afternoon of Sept. 24, falsely claimed that the spouses of 15,000 UPS employees will be "left without health insurance" and forced into "an exchange with no employer subsidy." UPS is dropping coverage for spouses only if they can get insurance with their own employer.

    Cruz: Just a few weeks ago UPS sent a letter to some 15,000 employees saying: We are dropping spousal health insurance because of ObamaCare. That is 15,000 UPS employees who had insurance for their husbands and wives, and suddenly those husbands and wives are left without health insurance and being told: Go on an exchange with no employer subsidy.

This misrepresents the impact that the UPS decision will have on spouses. It's true that UPS in August informed its employees that as of Jan. 1, 2014, it would no longer extend health insurance coverage to "working spouses" who are eligible to obtain coverage from their own employers. "Since the Affordable Care Act requires employers to provide affordable coverage, we believe your spouse should be covered by their own employer — just as U.P.S. has a responsibility to offer coverage to you, our employee," UPS said in a memo to employees.

But UPS said that it is "continuing to cover spouses who either don't work, or work for employers that don't provide health benefits." UPS said it currently covers about 33,000 spouses and it estimates that about 15,000 of those can get insurance through their employers.

Cruz mentioned UPS twice. The first time he used it — correctly — to illustrate the folly of President Obama's promise that "you can keep your own insurance." As we've said, Obama cannot make such a promise. Those working spouses of UPS employees won't be able to keep their insurance. Still, Cruz is wrong to say that those spouses will be "left without insurance."

OBAMA EXAGGERATES LAW'S IMPACT ON 'COST CURVE'

President Obama spoke with former President Bill Clinton in front of a live audience at the Clinton Global Initiative Health Care Forum in New York on Sept. 24. Obama greatly exaggerated when he credited the health care law for bending the cost curve on health care spending. Experts say the down economy is the overwhelming reason that national health care spending has been growing at historically slow rates in recent years.

    Obama, Sept. 24: [B]ecause of these changes we initiated in terms of how we're paying providers, health care costs have grown, as you pointed out, Mr. President, at the slowest rate in 50 years. We are bending the cost curve and getting at the problems that are creating our deficits in Medicare and Medicaid.

Clinton had earlier boasted of the slow rate of growth in national health care spending — a measure that includes spending by the government, businesses and individuals — saying that "[i]n the last three years, just as we started doing this, inflation in health care costs has dropped to 4% for three years in a row for the first time in 50 years."

Technically, the measure is health care spending, not costs, but it is true that the growth has been 4% in 2009, 2010 and 2011, the lowest rate of growth since the data were first collected in 1960 by the National Health Expenditure Accounts (see Table 3). And that's expected to continue through 2013. But how much of that is due to the Affordable Care Act? Experts say it might have played some role, but the main reason for slower growth in spending is the once-faltering and still-recovering economy.

The Kaiser Family Foundation analyzed the trend and determined that the economy was responsible for 77% of the slow growth rate. Plus, the study said, the rate of growth is expected to increase as the economy continues to pick up.

    KFF study, April 2013: Based on statistical analysis of 50 years of health spending and economic trends, the study finds that the economy, including factors such as Gross Domestic Product growth and inflation, produces a major but delayed effect on the nation's health spending. This effect stretches over a period of six years, meaning that the recession that ended in 2009 will continue to dampen health care spending for several more years and that spending will increase gradually as the economy strengthens.

The slower growth also began in 2009, before the law was signed.

In 2011, experts at the Centers for Medicare & Medicaid Services pointed to the economy as the reason for slower growth in spending: "Job losses caused many people to lose employer-sponsored health insurance and, in some cases, to forgo health-care services they could not afford."

That's not to say the health care law didn't play some role, albeit a significantly smaller one. The Kaiser Family Foundation study, conducted with the Altarum Institute's Center for Sustainable Health Spending, said that the remaining 23% of the slowdown in growth was due to "changes in the health care system, potentially including higher deductibles and other cost-sharing that dampen patients' use of services, as well as various forms of managed care and delivery system changes." The study said it "cannot determine the separate impact of these factors."

So, some changes in the health care system, which could be a result of the law, were a factor. Experts told the New York Times in February that the law may have contributed to changes in how insurers pay providers, by offering financial incentives. And there's been an effort in health care to reduce waste and limit rehospitalizations. The Times said: "Health experts say they do not yet fully understand what is driving the lower spending trajectory. But there is a growing consensus that changes in how doctors and hospitals deliver health care — as opposed to merely a weak economy — are playing a role."

This isn't the first time Obama, or Clinton, boasted of those low rates of spending growth. During his State of the Union address this year, Obama said the ACA "is helping to slow the growth of health care costs." This time, he flatly stated that the slow growth was "because of these changes we initiated in terms of how we're paying providers." And at the 2012 Democratic National Convention, Clinton suggested the law was the reason for the slowdown.

The ACA pushes for new payment models, as Obama mentioned, such as paying for outcomes and encouraging coordinated care. The Kaiser Family Foundation report said "substantial savings" were expected to come from Medicare, due to the law's reduction in the growth of payments to health care providers and insurers. But much of that part of the law hasn't been implemented yet. Says the study, in talking of the future: "Changes in the delivery system – through accountable care organizations (ACOs) and bundled payments to providers – may also yield results and help to keep 'excess' health costs down in public programs, as well as in private insurance."

The law is also expected to increase spending as more Americans purchase health insurance, some receiving government subsidies to do so or joining Medicaid. The Kaiser Family Foundation report said the law would cause "a modest one-time increase in health spending" because of that.

But, again, mainly it's the economy that's driving spending. And the growth rate is expected to increase in coming years as the economy further recovers. The Office of the Actuary for the Centers for Medicare & Medicaid Services estimates the growth at 6.1% for 2014, and near 6% for 2015.
IRS EMPLOYEES AND THE 'TRAIN WRECK'

Cruz said the "IRS employees union has asked to be exempted from Obamacare." Not so.

    Cruz: There is a reason why the IRS employees union has asked to be exempted from Obamacare. These are the guys who are in charge of enforcing it on the rest of us. They have asked to be exempt because it is not working. The facts are clear. It is a train wreck. As the lead author Democratic senator put it: It is a train wreck.

Cruz is referring to the National Treasury Employees Union, which represents over 150,000 agency and department employees, including the IRS workers.

But the union hasn't "asked to be exempted" from the law. NTEU opposes H.R. 1780, a bill from Rep. Dave Camp, which would move federal employees — including the president, vice president, members of Congress and other employees as defined by Title 5, Section 2105 of the U.S. Code — out of the Federal Employees Health Benefits Program and into health plans or insurance exchanges established under the Affordable Care Act.

The union doesn't have a problem with the health care law, though. In fact, it opposes Camp's legislation on the grounds that the bill goes against the intent of the law.

The union drafted a sample letter for its members to send to their representatives in Congress, asking them to oppose the legislation. It says the law's goal was "not to take coverage away from employees who already receive it through their employers."

    NETU sample letter: H.R. 1780 would put federal employees in a special class where they would be prohibited from receiving health insurance through their employer. It would treat federal employees differently from state and local government employees and most employees of large private sector companies who receive health insurance benefits through their employer. The primary purpose of the Affordable Care Act was to provide a marketplace for the sale and purchase of health insurance for those who do not have such coverage — not to take coverage away from employees who already receive it through their employers.

Cruz claimed that the IRS union was seeking "to be exempted" because Obamacare is a "train wreck," attributing the phrase to the bill's lead author, Sen. Max Baucus. Cruz said, "As the lead author Democratic senator put it: It is a train wreck." We've already debunked that claim. As we've written, Baucus was only referring to how the law was being implemented this spring — not the law itself.

At an April budget hearing, the Montana Democrat upbraided Health and Human Services Secretary Kathleen Sebelius for her department's lack of planning to properly implement the law, and warned of "a huge train wreck coming down." Baucus "was clearly commenting specifically on a concern he had regarding one aspect of implementation of the law — the rollout of the public awareness campaign," Meaghan Smith, an aide to the senator, told us.

Baucus is no longer concerned about that, however. In a Sept. 16 interview with Fox Business Network's Stuart Varney, Baucus said "I don't expect a train wreck" when the exchanges open for business on Oct. 1.

RACIAL DISPARITY IN UNEMPLOYMENT RATES

Cruz cited an apples-to-oranges comparison of unemployment rates while making a point about how Obamacare disproportionately hurts minorities.

    Cruz: If you are lucky enough to be a college graduate, your unemployment rate is 3.5%. … For black teens the unemployment rate is over 10 times higher than it is for college graduates — 38.2%.

Cruz's numbers are correct. According to the Bureau of Labor Statistics, the unemployment rate for blacks between the ages of 16 and 19 was 38.2% in August. And the unemployment rate for college graduates over the age of 25 was 3.5% in August. But he's comparing black teens to college graduates over the age of 25. The unemployment rate for whites aged 16 to 19 is also high — 20.5% in August.

In other words, there is a racial disparity, but it's not 10-to-1.

QUOTING MARK ZANDI

Cruz cited an outdated quote from Mark Zandi, chief economist of Moody's Analytics, to back up his claim that Obamacare is slowing job growth.

    Cruz: In May 2013 Moody's economist Mark Zandi noted a slowdown in small business hiring due to Obamacare.

It's true that in an interview on CNBC on April 5, Zandi said just that when asked about a jobs trends.

    Zandi, April 5: But again, I think health care reform might be having an impact. … [W]ith employees [totaling between] 50 to 499 — that's the group that would be affected by the health care reform — we've seen a rather sharp slowing in job creation.

But that's not what Zandi has been saying more recently.

"There is little evidence that fiscal austerity and health care reform have had a significant impact on the job market," Zandi said in a Sept. 5 story in USA Today.

We reached out to Zandi and asked if Cruz had quoted him accurately and in context. Moody's sent this response from Zandi: "Yes, in the spring there appeared to be a slowdown in job growth at small businesses. But this is no longer the case. Job growth at small businesses picked up this summer. I don't see any meaningful impact on job growth from healthcare reform, at least not yet."

PAUL: OBAMACARE DRIVING UP COSTS

During his brief cameo in Cruz's lengthy speech, Sen. Rand Paul argued that due to Obamacare, "everybody is going to pay more." The fact is, some will pay more and some will pay less.

    Paul, Sept. 24: We went through this whole debacle of giving people ObamaCare and it is going to be expensive. Everybody is going to pay more. Many people still will not have insurance. The ones who do have insurance are going to pay more.

As we wrote recently in our wrap-up of Obamacare myths, how much you pay depends on such things as your age, health and whether or not you are currently insured. Those who are uninsured and have a preexisting condition will likely pay less than they would have otherwise. Those who are uninsured but young and healthy will likely pay more (without accounting for any subsidies they may receive). Those who are insured through their employer likely won't see much change either way. And some of the currently uninsured will pay little to nothing because they will join Medicaid — the program will expand by 13 million Americans by 2020 under the law, according to Congressional Budget Office estimates.

Employer-sponsored premiums did go up slightly due to the law from 2010 to 2011 (a 1% to 3% increase, according to experts), because of added benefits, such as coverage for dependents up to age 26, free preventive care and an increase in caps on coverage. Since then, premium growth has been 4% on average for 2012 and 2013, modest growth rates historically.

For those who buy their own insurance, it's difficult to make generalizations about who will pay less or more. Many who had purchased on the individual market in the past will get more generous benefits. And the vast majority buying their own exchange plans — 80%, according to the Congressional Budget Office — will receive subsidies that bring their total out-of-pocket costs down.

Plans sold to individuals can no longer charge more based on health status or gender, but they can vary premiums based on geography, age and tobacco use. A RAND study, published in August and sponsored by the Department of Health and Human Services and the Centers for Medicare & Medicaid Services, estimated there would be "no widespread trend toward sharply higher prices in the individual market," in the words of the lead author. Rates would likely vary from state to state and based on individual circumstances. So Paul is wrong to make the sweeping claim that "everybody is going to pay more."

OBAMA'S PREMIUM PROMISE

Cruz said Obama promised in 2010, when the Affordable Care Act passed, that premiums "would drop $2,500? for the average family by the end of his first term. That's not exactly what the president said or when he said it.

    Cruz: President Obama three-and-a-half years ago promised the average American that by the end of his first term, by the end of last year, the average American family's premiums would drop $2,500.

By saying three-and-a-half years ago, Cruz is placing Obama's comments in 2010, which is when the law was passed. But Obama initially promised to lower premiums $2,500 by the end of his first term in June 2008 while running for president. That's five-and-a-half years ago.

    Obama, June 5, 2008: In an Obama administration, we'll lower premiums by up to $2,500 for a typical family per year. And we'll do it by investing in disease prevention, not just disease management; by investing in a paperless health care system to reduce administrative costs; and by covering every single American and making sure that they can take their health care with them if they lose their job. … And we won't do all this twenty years from now, or ten years from now. We'll do it by the end of my first term as president of the United States.

At the time, we called Obama's promise "misleading" and "overly optimistic." That's because the campaign told us half of the savings would come from investing in electronic health records and the campaign relied on a study that projected those savings would not fully materialize until 2019 — well beyond Obama's first term. Plus, estimated savings wouldn't go just to families, but to all of those who pay into the health care system, including governments and businesses.

Now, Obama did repeat a version of his promise in 2009 during the congressional debate over the federal law, saying the legislation plus some effort to reduce costs from labor unions, and insurance, drug and medical industries "could save families $2,500 in the coming years — $2,500 per family." But this time the president didn't say by the end of his first term.

    Obama, May 13, 2009: On Monday I met with representatives of the insurance and the drug companies, doctors and hospitals, and labor unions, groups that included some of the strongest critics of past comprehensive reform proposals. We discussed how they're pledging to do their part to reduce our nation's health care spending by 1.5% per year. Coupled with comprehensive reform, this could result in our nation saving over $2 trillion over the next 10 years, and that could save families $2,500 in the coming years — $2,500 per family.

As we said at the time, the promise was "still optimistic." But, he didn't promise this would be done by the end of his first term and Obama didn't promise that premiums "would drop," as Cruz put it. The Obama administration told us that future spending could be $2,500 per family lower compared with what it was otherwise projected to be.

A year later, White House Deputy Chief of Staff Nancy-Ann DeParle told ABC News that the law needs to play out before savings materialize. She said "by 2019 we estimate that the average family will save around $2,000."

REPEATED CLAIMS

We also heard some claims that we have debunked before, including these:

    Cruz repeated the false claim that members of Congress are exempt from the health care law. As we have written numerous times, the law requires congressional members and their staffs to get insurance through the newly created exchanges, so they are not exempt. In fact, the law prevents them from getting insurance through the Federal Employees Health Benefits Program, like other federal employees. However, the federal government, will continue to make contributions toward the premiums of lawmakers and their staffs — just as most large employers do for their employees.
    Cruz said, "Obamacare has a philosophy: empower government over your life, put a government bureaucrat between you and your doctor." But, as we've said, the law doesn't create a government-run system. If anything, the law comes between you and your insurance company, forbidding them from capping your coverage or charging you more based on health status.