Healthcare summit: Obama, Sen. Kyl debate apples and oranges

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President Obama and Sen. Jon Kyl (R-Ariz.) have squared off over a ‘fundamental difference’ between the parties: Should Americans be required to buy insurance that would have a higher cost, in exchange for receiving a higher range of coverage and benefits?

The arguments, in simple terms: Kyl cites a Congressional Budget Office estimate that average premium rates for people buying insurance in the individual market would be 10% to 13% higher in 2016 under the proposed bill than under current law. This is because insurers would be required to sell policies that offer wider benefits and cover a higher portion of a consumer’s medical costs.

Kyl says that prices would rise because the ‘actuarial value,’ or the average portion of beneficiaries’ healthcare costs that are covered by the insurer, would be raised from around 50% today to 60% under the bill.

By comparison, the average ‘Cadillac plan’ today has an actuarial value of more than 85% percent. Obama argues that this is a good thing -- or at least worth the extra price -- because people would be better insured under policies that cover a larger share of their medical costs.

‘Yes, I’m paying 10 to 13% more because instead of buying an apple, I get an orange,’ Obama said. What both sides have failed to address is whether that orange -- while maybe better than the apple -- would actually insure people who incur major medical costs. Is 60% that much better than 50%?

That still leaves consumers paying a major portion -- 40% percent on average -- of the healthcare bill.

-- Kim Geiger