I suppose that opponents of healthcare reform will focus on the one negative in the analysis released today by the Congressional Budget Office: i.e., by 2016 individual health plan premiums would be 10% to 13% higher after reform than under current law. To do so, however, would be a narrow and intellectually dishonest interpretation. The CBO report in my view is the strongest statement yet on the cost benefits of reform.
First, the issue of individual premiums. Yes, they would be higher on average, but that’s because people would be getting much better coverage. Notes CBO:
The average insurance policy in this market would cover a substantially larger share of enrollees’ costs for health care (on average) and a slightly wider range of benefits.
Furthermore, even though premiums would be higher, most Americans wouldn’t have to pay the higher rates because of subsidies included in the reform legislation. In fact, 57% of Americans would be eligible for subsidies, CBO notes; the amount these subsidized individuals would pay would be 56% to 59% lower than under current law. Individual (or non-group) would account for 17% of the commercial market following reform or 32 million people — of which 18 million would be paying much less for much better health insurance.
Now here’s the big news. According to CBO, premiums for large employers (i.e., more than 50 workers) would be unchanged or down as much as 3%. Large employers make up 70% of the commercial market or 134 million people. Small groups (up to 50 workers) would see premiums range from up 1% to down 2% (Note: about 12% of small groups would be eligible for subsidies; their premiums would fall 8% to 11%). Small group makes up 13% of the commercial market or 25 million people.
And what about all those fears of cost-shifting to the private insurance market? CBO notes:
The effect of the proposal on premiums through changes in cost shifting seems likely to be quite small because the proposal has opposing effects on different potential sources of cost shifting, and the total amount of cost shifting in the current health care system appears to be modest relative to the overall cost of health insurance.
So to reiterate: under reform premiums for 134 million people in large groups would be flat to down, premiums for 25 million people in small groups would be flat to down, costs for 18 million people with subsidized individual plans would be down (a lot) — and costs for 14 million unsubsidized individuals would be up 10% to 13% because they’re getting much better coverage.
All of which is why the CBO analysis is a slam dunk for reformers.
Addition (Dec. 1, 9:47 a.m.): Sorry, I failed to note that the CBO analysis specifically referred to the Senate bill.
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You might want to take a minute to expain where the subsidies to those receiving them are coming from. I wonder if it from the 43% who are not receiving subsidies? What do you think?
The email below came in today from Jim Hea of Resource Benefits Inc. (Plantation, FL), proving yet again passions run high on healthcare reform. Jim writes:
“Slam dunk hell??? Get real.
“Where do you feel the tax money to cover subsidies for the 57% of Americans will come from? What isn’t paid in premiums will be shared by most of us in the form of additional taxes.
“You must be smoking the same stuff all the voters for “Hope & Change” must have been smoking in the 2008 Presidential election!
“P.S. – Show me one CBO Cost Analysis that pegged real costs. I don’t think they’ve ever been right! Real costs have always exceed CBO projections!!!”
http://www.resourcebenefitsinc.com/
For employers who do not currently provide health insurance but pay higher wages instead () OPur average wage for clerical staff is $14.25/ hour), the end result of this so called reform will be that our 240 employees will have to accept a reduction in their current salaries or wages in order to off set the cost of the benefit. I seriously doubt that the CBO calculated the cost of lower wages as the trade-off for this healthcare benefit. We will be reminding the staff that the country wanted change and choice. They will definitely get the change but there will be no choice when it comes to their healthcare insurance.
Imagine… You are 27 years old and in excellent health. You can’t afford a home or a car but you have great health insurance that you never use. What a country!
[...] care: Critics purport one thing, but when it comes down to it I refer to 1) the NON-PARTISAN numbers posted by the Congressional Budget Office on costs over 10 years relative to savings and 2) [...]