The release of the Congressional Budget Office’s report this week predicting how health reform might affect insurance premiums dished up something for everyone. Premiums could go up; they could go down; they could stay the same—and by the way, CBO’s predictions wouldn’t come true for another six or seven years. By then, the insurance industry could turn upside down; a cancer cure could spark tons of costly new technology; maybe the sky will fall in. Who really knows?
Certainly not the media, which seemed to be baffled about what, exactly, the CBO report was saying. Pity the poor news consumer who could have been totally confused by the divergent headlines.
“No Big Cost Rise in U.S. Premiums Is Seen in Study,” proclaimed the hed on a New York Times story. The Mercury News ran the Times story, but with this headline: “CBO says Senate health bill may cut cost for many.” USA Today saw it this way: “Report predicts level premiums for those insured through work.” The Atlantic went with this headline on its Politics blog: “CBO: Premiums Would Increase…And Cost Less.”
The Wall Street Journal described the report this way: “Some Health Premiums to Rise.” The NewsHour topped its online story with this headline: “CBO: Senate Bill Would Raise Some Premiums, Lower Others.” The PR Newswire ran a statement from the Blue Cross and Blue Shield Association with this: “CBO Confirms That Premiums Will Increase Under the Senate Healthcare Reform Bill.” The Web site examiner.com picked up that story, same hed and all. The American Spectator’s blog used this hed: “CBO: Senate Health Care Bill Would Raise Premiums 10-13 Percent.”
So what exactly did the CBO say?
• The average premiums for each person covered in the new individual market would be about ten to thirteen percent higher in 2016 than they would be if current laws were to stay in effect. Average premiums for single people would be about $5,800 and $15,200 for families, compared with $5,500 and $13,100 under current law. Half of the people in that market would get subsidies to help pay those premiums—so their premiums would be lower. The rest would not, and their premiums would be higher—perhaps much higher.
• For employers with fewer than fifty workers, average premiums could increase one percent or decrease two percent. A few people whose employers would get a tax credit might see more of a reduction.
• For employers with more than fifty employees, average premiums might not change much, and could even be three percent lower.
• Premiums for family policies in both employer markets would still be in the $20,000 per year range, roughly the same price tag that causes panic among human resource managers today.
• The CBO hedged on its assessment of how premiums would actually affect families: “As in the nongroup market, the effects on the premiums paid by some people for coverage provided through their employer could vary significantly from the average effects on premiums, particularly in the small group market.” In other words, they could be higher, or they could be lower. No one knows for sure.
There you have it: The currently uninsured who will be required to buy coverage will face significant increases in the premiums they will pay; half of the new customers buying these individual market policies won’t qualify for government help; those over the line would pay more. Ironically, this is the group in whose interests the health reform battle has been fought, and arguably need just as much help paying for health insurance. If many of these folks could afford insurance now—at today’s price levels—they would have already bought it. Subsidies don’t change the underlying cost of the policies. Costs are just shifted to taxpayers, many of whom will get nothing from reform.