CBO: Senate bill would increase individual insurance premiums

A long-awaited analysis found the Senate healthcare bill
would raise insurance premiums for some, lower others and leave some
essentially untouched, further entrenching both parties in their positions for
and against the bill.

Senate Democrats and Republicans seized on the report issued
Monday by the Congressional Budget Office (CBO) and the Joint Committee on
Taxation (JCT) to bolster their arguments on the same day the floor debate
formally commenced.

{mosads}To Democrats, the report affirms the bill offers affordable
access to healthcare to tens of millions of people without insurance while
offering modest relief to the nearly 160 million people who receive insurance
through their jobs.

“Most Americans will see lower premiums as a direct result
of reform,” Senate Majority Leader Harry Reid (D-Nev.) said in a statement.
“Today’s analysis confirms that millions of Americans who lack the necessary
coverage to avoid potential financial ruin would have access to more coverage
at an affordable price because of our proposal.”

Republicans contend that the findings prove the Senate legislation
would result in higher premiums for millions of people compared to what it
would cost them in today’s market.

“The bottom line is this: after 2,074 pages and trillions
more in government spending, massive new taxes and a half-trillion dollars in
cuts to Medicare for seniors, most people, according to the Congressional
Budget Office, will end up paying more or seeing no significant savings,”
Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement. The health
insurance industry’s lobbying arms also proclaimed that the report confirmed
their similar warnings.

The nonpartisan experts at the CBO and the JCT do not
conclude that either side of the political debate is as correct as they say.

The report paints a complex picture of the bill’s impact to
the vast health insurance marketplace by 2016.

It finds the Senate legislation would reduce premiums by up
to 3 percent for 134 million people who get insurance as a job benefit. This
population is by far the largest component of the health insurance market: When
the reforms kick, 70 percent of people with coverage would get it from their
jobs, a slight increase from the current rate.

The average premium for people who work at large companies
would remain about the same: $7,300 annually for an individual plan and $20,100
for a family policy.

For small businesses that cover their workers in the
so-called small group market, the average change in insurance premiums would
range from a 2 percent decrease to a 1 percent increase. Factoring in new subsidies
available to people with incomes below 400 percent of poverty, individuals in
this market would pay 8 percent to 11 percent less than they do now. Under the
bill, 13 percent of insured people would fall into this category.

According to the CBO and the JCT, that translates into
$7,800 annually for an individual policy through a small employer — about the
same as they pay now — and a decrease of $100 for a family plan, to $19,200.

The impact of the Senate bill on the individual market,
which comprises a diverse array of people from the self-employed to those not
offered coverage by their employers, is more complex to measure.

The direst finding for Democrats — and the figure
highlighted by Republicans — is health insurance premiums would be 10 percent
to 13 percent higher for the 13.3 million people required to buy insurance
under the bill, compared to what they would pay absent the legislation.

Premiums would actually increase by the same factor for all
31 million people who would buy insurance on the bill’s new exchanges but 17.7
million of those people — or 57 percent — would be eligible for federal
subsidies. Those would be offered on sliding scale for individuals and families
earning up to 400 percent of poverty. The bill does allow people to retain the
policies they already have without change, however.

“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 report says.

For those individuals receiving subsidies, however,
insurance would actually cost them 56 percent to 59 percent less than coverage
on the individual market under the current system. The subsidy would cover
about two-thirds of their premiums on average.

One of the chief reasons insurance premiums would be higher
for some people is that reform would require insurance companies to offer
everyone in the individual and small-group market more generous and more stable
coverage and increase competition among insurers, the report notes.
Administrative savings would also offset the additional cost.

“Let’s be clear: where the CBO does see premiums rising,
it’s not because Americans are paying more for the same coverage — it’s that
they’re making a choice to purchase better plans that weren’t previously
available to them,” White House communications director Dan Pfeiffer wrote on
his official blog. According to memo from the Senate Finance Committee, buying
an equivalent policy today would cost 14 percent to 20 percent more than under

This argument did not hold much water with Republicans.

“The Democrats bills will still require nearly 14 million
Americans to purchase unsubsidized insurance that is more expensive than they
could get under current law,” says a memo issued to GOP health aides by the
Senate Republican Policy Committee.

Viewed alone, the improved coverage would increase premiums
by 27 percent to 30 percent for individuals and up to 3 percent for those
enrolled in small-business insurance plans. That increase, Democratic aides
stressed, is significantly mitigated by the fact that more people — and more
healthy people, especially — will be in the insurance pool, spreading the
insurance companies’ financial risk across a broader population.

A Senate Republican aide contended the increase to the
individual-market premiums is the number that matters. Teasing out the other
effects, the aide said, is “a little bit of Bernie Madoff accounting.”

Democrats have stressed throughout the debate that health
insurance premiums already are escalating rapidly under current system, which
leaves tens of millions of people without coverage and many more with
inadequate coverage.

“In recent years, Americans have seen their health insurance
premiums creep higher and higher at an alarming rate. Health reform set out to
slow those rapid increases, and today the nonpartisan congressional budget
scorekeepers told us we’ve succeeded,” Finance Committee Chairman Max Baucus
(D-Mont.), one of the chief architects of the bill, said in a statement.

Jordan Fabian contributed to this article.

Tags Harry Reid Max Baucus Mitch McConnell

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