CBO: House health bill would lower some middle class premiums, raise costs for others

Nov 3 2009

House Democrats say their health overhaul proposal will lead to health insurance premium savings for many consumers, though estimates of the overall measure's cost, as well as the taxes and fees required to pay for it, is a source of criticism and concern.

The New York Times: "As the House moved toward climactic votes on legislation to remake the health care system, the Congressional Budget Office said Monday that middle-income families might be required to pay 15 percent to 18 percent of their income on insurance premiums and co-payments under the proposal."

Democrats say the figures are evidence that low- and middle-income families would see reduced premiums. "The House Democrats' bill would offer $600 billion in subsidies to help low- and middle-income people buy insurance, most of it from private insurance companies, according to the Congressional Budget Office." The CBO also says a family of four with income of $78,000 in 2016 will on average pay $8,800 in premiums and co-payments of $5,000 a year — 18 percent of the family's income. For lower income people, with an income of $66,000, the total would be 15 percent of its income in 2016 (Pear and Hulse, 11/2).

The Associated Press/Newsvine: "The health care bill headed for a vote in the House this week would cost $1.2 trillion or more over a decade, according to numerous Democratic officials and figures contained in an analysis by congressional budget analysts, far higher than the $900 billion cited by President Obama as a price tag for his reform plan." Some of the additional expense is a result of funding for public health, a reinsurance program to hold down retiree insurance costs, and payments for preventive services. But despite the assistance Democrats hope to provide, "the CBO said yesterday that some middle-class families would still face a big budget hit for health care." And the overall cost of the bill is also a source of criticism: "House Speaker Nancy Pelosi has referred repeatedly to the (House) bill's net cost of $894 billion over a decade for coverage. Republicans put the cost of the bill at nearly $1.3 trillion" (Espo, 11/2).

The Associated Press/Chicago Tribune reports that the rich, tagged to pay for a portion of the bill through an excise tax on income, would be the group ones responsible for a big part of the tab. "The bill is funded largely from a 5.4 percent tax on individuals making more than $500,000 a year and couples making more than $1 million, starting in 2011. The tax increase would hit only 0.3 percent of tax filers, raising $460.5 billion over the next 10 years, according to congressional estimates. … The tax would hit only 1.2 percent of taxpayers who claim business income on their returns, according to the estimates by the nonpartisan Joint Committee on Taxation. But that percentage would grow as business owners' nominal incomes rise with inflation" (Ohlemacher, 11/3).

In the meantime, skeptics of the government-run public option in health care reform are finding support for their position in the CBO score, Bloomberg reports. "The Congressional Budget Office says a version of the so-called public option backed by House Democrats would charge 'somewhat higher' premiums than the average private insurance policy offered on a government-sponsored exchange to be set up to sell coverage to small businesses and individuals." Part of the reason for the increased cost is the failure of Democratic leadership to get the votes for a "robust" public option — one with rates tied to Medicare (Rowley, 11/3).

Finally, hospitals are joining the cost-worrying fray, saying examining Medicare spending — part of a mandated study in the House health care reform bill — will lead to urban hospitals receiving less money to provide care, The New York Times reports in a separate story. "The bill requires the (Institute of Medicine) to recommend changes that would reward 'quality and value,' (in hospital Medicare spending) and those changes would take effect automatically unless Congress objected by May 31, 2012" (Hartocollis, 11/2).