Premiums will rise up to 50 percent for individual policies and 19 percent for small group plans if healthcare reform passes, a new report released by a major health industry trade group claims.
Sponsored by the Blue Cross Blue Shield Association (BCBSA) and conducted by Oliver Wyman Inc., the report faults reform legislation for lacking a strong individual mandate. Requiring healthy Americans to purchase reform would help offset costs for the millions of people with health problems who would purchase insurance policies under the new system, the study finds.
"Requiring insurers to guarantee issue coverage regardless of pre-existing conditions — without an effective mandate — means that people can wait to purchase coverage until they need it, causing premiums to increase for most new purchasers," the report claims.
The new study comes just days after a similar report from America's Health Insurance Plans (AHIP), which said premiums would rise up to $4,000 more than if no legislation were passed.
The BCBSA study finds that premiums in the individual insurance market will rise by 50 percent after five years of enacting reform. That translates into $1,500 for individuals and $3,300 for families.
Those who receive coverage from "small group plans" — usually through small businesses — could see premiums rise 19 percent after five years. That could result in 2.5 million fewer people receiving coverage from small businesses, the study claims.
Federal subsidies would offset those increases for families whose income is less than four times the federal poverty level.
The White House and Democratic lawmakers blasted the AHIP report. A spokesman for the Senate Finance Committee called it a "health insurance company hatchet job."
Many Democrats said the AHIP report proved the need for a public option. But because the public options being considered in various other versions of reform would have to generate revenue through premiums — and not federal funds — BCBSA claims a public option would suffer from a weak individual mandate as well.
"The government plan would have the exact same consequences," said Alyssa Fox, senior vice president, Office of Policy and Representation of BCBSA.
Scott P. Serota, president and CEO of BCBSA, said his company was still eager to enact reform.
"I want to underscore our strong commitment to working with Congress and the administration to enact bipartisan legislation this year," he said in a letter to lawmakers accompanying the report.
One of the report's key findings is that a stronger individual mandate could greatly reduce healthcare costs.
"Strong mandates, beginning in year one, coupled with meaningful penalties, will help to ensure enrollment of young, healthy individuals to balance inflow of higher-cost people," the study reads.
Sen. Olympia Snowe (Maine), so far the only Republican backing the Senate's healthcare legislation, was the driving force behind weakening Finance Committee's mandate and penalties during markup and has said she would rather do without the mandate altogether.
BCBSA is worried that lawmakers will dial it back even further, allowing more young and healthy people to go without insurance.
"We're very concerned because in some of the conversations, we're hearing that the mandate is not weak enough," said Fox.
Though the White House seems open to an individual mandate, President Barack Obama opposed the idea during his campaign, which suggests he might be willing to sign a bill without a mandate or with a relatively weak one.