CBO: Senate Bill Will Actually Increase Insurance Premiums
Nov 30, 2009 1 Comment ›› Pat Dollard
Individual insurance premiums would increase by an average of 10 percent or more, according to an analysis of the Senate healthcare bill.
The long-awaited report by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) also concluded that subsidies provided by the legislation would make coverage cheaper for those who qualify.
The report, issued in the form of a letter to Sen. Evan Bayh (D-Ind.), will provide both Democrats and Republicans with ammunition as the Senate begins amending the healthcare bill on Monday.
“CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law. About half of those enrollees would receive government subsidies that would reduce their costs well below the premiums that would be charged for such policies under current law,” the report says.
Though Republicans will seize on the projections that insurance premiums for individuals would increase, Democrats will highlight the conclusion that the legislation would lower premiums by 56 to 59 percent for those individuals who would receive subsidies to buy insurance on the exchange created by the legislation. Of those who participate in the exchange, 57 percent would be eligible for subsidies. The subsidy would cover about two-thirds of their premiums, the report says.
This exchange, open to individuals and small-business employees, would provide coverage to just 17 percent of the marketplace, the report notes. The bill would have a different effect on the small-group insurance market utilized by many small businesses and the large-group market of employer-provided insurance, which would cover 70 percent of Americans with benefits. Premiums would range between the same to 3 percent lower for employer-sponsored insurance and from 2 percent lower to 1 percent higher for small-group plans, according to the report.
The report also provides projections for the actual average price of insurance purchased on the exchange. “Average premiums per policy in the nongroup market in 2016 would be roughly $5,800 for single policies and $15,200 for family policies under the proposal, compared with roughly $5,500 for single policies and $13,100 for family policies under current law,” the agencies say.
But the CBO and the JCT emphasized that one of the reasons premiums would be higher for some people is that the insurance they would buy would be more generous, cover more services and provide greater protections against high costs due to serious illness or injury.
Altogether under the Senate bill, 134 million people would get insurance from the large companies for which they work, 25 million from small-business employers and 32 million from the insurance exchange. The CBO previously projected that the legislation would extend coverage to 31 million more people than currently uninsured.
The analysis does not measure the effects on premiums of a proposed excise tax on the most expensive insurance plans. Consistent with their previous reports, the CBO and the JCT predict that most people who currently have so-called Cadillac insurance plans would opt for less expensive insurance to avoid the tax.
