Millions of Families Will Pay $2,100 More in Annual Health Insurance Premiums Under Senate Bill
December 1, 2009 - 9:41 AMA government analysis of the Senate health care bill found that many people buying their own family health insurance policies on government-run exchanges will see their premiums increase by up to 13 percent in 2016, the year in which the Senate bill takes full effect.
That’s according to an analysis conducted by the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JTO).
The CBO-JCT analysis of Sen. Harry Reid’s bill found that people buying their own health insurance policies on government-run exchanges – as they will be required to do if they lack coverage through work -- will see their premiums increase by up to 13 percent in 2016, the year in which the Senate bill takes full effect.
For people purchasing their own insurance on government-run exchanges, "Average premiums per policy …in 2016 would be roughly $5,800 for single policies and $15,200 for family policies under the proposal, compared with roughly $5,500 for single policies and $13,100 for family policies under current law."
Put another way, under Reid’s bill, a family in 2016 would pay $15,200 for an insurance plan, up $2,100 from the $13,100 they currently pay.
Costs would not go up for everyone who buys their own insurance: The CBO analysis says about 57 percent of the individuals purchasing their own insurance “would receive government subsidies that would reduce their costs” below what they’re paying now.
The subsidies, on average, “would cover nearly two-thirds of the total premium,” the analysis said. (The Senate bill would subsidize the purchase of insurance policies for individuals and families with incomes between 133 percent and 400 percent of the federal poverty level.)
But the other 43 percent who do not qualify for federal subsidies would end up paying higher premiums.
CBO and JCT estimated that roughly 23 million people would purchase their own coverage through government-run exchanges in the year 2016 -- and roughly 5 million of those people would not receive federal subsidies.
Further, the CBO analysis assumes that employers will continue providing health insurance for their workers rather than pay a government fine for failing to provide coverage.
But what if that doesn’t happen? If people who now have insurance through their employers are forced out of their plans -- because their bosses would rather pay a fine than pay for insurance – many more Americans would have to buy their own individual policies – and many of them presumably would not qualify for federal subsidies.
The CBO-JCT analysis says most people who get their insurance through their jobs would not notice much change in their premiums under the Reid bill, although in many cases the premiums would be slightly lower.
But the CBO-JCT analysis also noted that the Senate bill would impose an excise tax on “high-value” employment-based policies.
Reaction varies by party
Rep. Mike Pence, chairman of the House Republican Conference, said the CBO analysis “confirm[s] what every American already knows: the Democrats’ plan for a government takeover of health care will dramatically raise health care costs on working families.”
Pence focused on the 13-percent hike in premiums purchased through government-run insurance exchanges: It means that “every family that refuses the government’s one-size-fits-all plan, will be forced to spend an additional $2,100 a year to keep their current health care.”
During his campaign, Pence noted, Barack Obama promised to deliver health care reform that would lower premiums by $2500. “In light of this new CBO report, I urge the president to call on Democrat leaders to start over or explain to the American people why lowering health care costs isn’t a promise worth keeping.”
Democrats were pleased with the CBO analysis: "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," the Washington Post quoted Senate Majority Leader Harry Reid as saying.