First, the reaction to the CBO report from the Wash Post:
As the Senate opened debate Monday on a landmark plan to overhaul the nation's health-care system, congressional budget analysts said the measure would leave premiums unchanged or slightly lower for the vast majority of Americans, contradicting assertions by the insurance industry that the average family's coverage would rise by thousands of dollars if the proposal became law.
The report by the nonpartisan Congressional Budget Office was released hours before the Senate began debate on the package, which would spend $848 billion over the next decade to extend coverage to more than 30 million additional people. The CBO said the legislation would lead to higher average premiums in the relatively small and troubled individual market, where the self-employed and others buy coverage directly from insurers. But that extra cost would buy better coverage, the CBO said, and hefty federal subsidies would drive down payments by nearly 60 percent on average for low- and middle-income families.
Democrats, who had been nervously awaiting the CBO's pronouncement on premiums, hailed the report as a political vindication that should help reassure wavering moderates in both parties.
"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," said Senate Majority Leader Harry M. Reid (D-Nev.), who crafted the measure from bills approved in committee.
Republicans argued that millions of people could face higher premiums with no promise of federal aid. And despite dozens of pages of new insurance industry regulations, they said, the Senate bill would do little to lower premiums for the 160 million people who already have coverage through their jobs.
"For large and small employers that have been struggling for years with skyrocketing health insurance premiums, CBO concludes this bill will do little, if anything, to provide relief," said Sen. Charles E. Grassley (R-Iowa). "CBO's analysis makes clear that the Reid bill is not fixing the problem."
Then, the details of the CBO report from the NY Times:
In its report, the budget office compared estimates of premiums in 2016 under the new legislation and under current law. In either case, after seven years of inflation, premiums would be substantially higher than they are today.
The budget office said the analysis of premiums was extremely complex, so the experience of individuals and families "could vary significantly from the average.”
“In general,” it said, “the proposal would tend to increase premiums for people who are young and relatively healthy, and decrease premiums for those who are older and relatively unhealthy.”
Under the legislation, it said, the average premium per person in the individual insurance market would be 10 percent to 13 percent higher than under current law. But, it said, most people in this market — 18 million of the 32 million people buying insurance on their own — would qualify for federal subsidies, which would reduce their costs well below what they would have to pay under current law.
For people receiving subsidies, the budget office said, premiums would be 56 percent to 59 percent lower than under current law.
Without subsidies, it said, premiums under the bill would average $5,800 a year for individuals and $15,200 a year for families buying coverage on their own. Under current law, the comparable figures would be $5,500 and $13,100.
“This study indicates that, for most Americans, the bill will have a modestly positive impact on their premium costs,” Mr. Bayh said. “For the remainder, more will see their costs go down than up.”
Under the bill, the budget office said, individual policies would have to provide more benefits and pay a larger share of costs than most existing policies do. In other words, it said, some people would pay more, but would also get more.
Insurers, it said, would have to cover certain services that, in many cases, are not covered by existing policies in the individual insurance market. These include maternity care, prescription drugs, mental health services and substance abuse treatment. Moreover, it said, under the legislation, insurance would cover an average of 72 percent of medical costs for people buying insurance on their own, up from 60 percent under current law.
The budget office said it foresaw “smaller effects on premiums for employment-based coverage.”
In groups with 50 or fewer employees, it said, unsubsidized premiums in 2016 would average $7,800 a year for individuals and $19,200 for families — scarcely any different from the amounts expected under current law. Of the 25 million people receiving coverage from small businesses, it said, 3 million would qualify for subsidies, which would reduce their premiums by an average of 8 percent to 11 percent.
Large employers would generally not be eligible for such assistance. Their premiums in 2016 under the bill would average $7,300 for individual coverage and $20,100 for family coverage, the report said. Under current law, the comparable figures would be $7,400 for individual coverage and $20,300 for family coverage.
The Senate bill would impose an excise tax on high-premium health plans offered by employers. People who remain in such “Cadillac health plans” would pay higher premiums, but most people would avoid the effect of the tax by enrolling in plans with lower premiums, the budget office said.
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