CBO report: Senate health proposal would raise some premium costs

Nov 30 2009

Reuters: "The U.S. Senate's healthcare bill would raise insurance premiums by at least 10 percent by 2016 for those independently buying coverage, but subsidies would reduce the actual costs for half of that group, the Congressional Budget Office said on Monday." According to the budget office, the bill's impact on people who receive their health coverage through their employers would be smaller.

In addition, the CBO estimated that "[e]mployers with 50 or fewer workers could see premiums go up slightly, but costs could decline by as much as 2 percent per worker relative to current expectations," Reuters reports. In addition, the report, which was released just as the Senate was poised to begin debate on a sweeping health overhaul measure, concluded that "[p]remiums for larger employers could be as much as 3 percent lower in 2016." One of the reasons cited for the projected increase is that people purchasing health coverage on the individual market will be choosing among plans offering greater benefits than current policies.

Increased competition among insurers participating in newly created exchanges "will help reduce premiums in the nongroup market, the CBO said," while "proposed new fees on insurers and other health sector businesses would increase premiums slightly" (Smith and Whitesides, 11/30).

The Hill: "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."

Reuters, in a second story: "The estimate, requested by Democratic Senator Evan Bayh, included a 'substantial degree of uncertainty,' the CBO said, adding the results would vary depending on the amount of coverage purchased, the level of enrollment and other factors." Reuters also reported that health insurers' shares fell following the release of the CBO report (Smith And Whitesides, 11/30).

Bloomberg: The CBO analysis "found the legislation would have a more mixed effect on those who buy policies on their own, cutting premiums as much as 59 percent for people who also receive government subsidies while boosting rates as much as 13 percent for others. The CBO estimated the change in premiums for 2016" (Nussbaum, 11/30).