Healthcare Reform will Lower Premiums

[jsteele]

Two reports issued today that analyze cost savings in the Senate version of the healthcare reform bill suggest the bill would result in lower premiums for US consumers. First is a report from MIT economist Jonathan Gruber:

http://www.politico.com/news/stories/1109/29959.html

"The report concludes that under the Senate’s health-reform bill, Americans buying individual coverage will pay less than they do for today's typical individual market coverage, and would be protected from high out-of-pocket costs."

"Gruber concludes that people purchasing individual insurance would save an annual $200 (singles) to $500 (families) in 2009 dollars. And people with low incomes would receive premium tax credits that would reduce the price that they pay for health insurance by as much as $2,500 to $7,500."

Second, the Congressional Budget Office (CBO) also released a cost analysis:

http://cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

This analysis is more complex and will probably be misrepresented by healthcare reform opponents. Nevertheless, it argues that while individual premiums may rise, the actual amount individuals pay will decrease from today's rates (due to subsidies). Both small and large group plans will see lower costs as well, according to the CBO analysis. The key here is that some individual plan buyers will see premiums rise, but the average buyer will actually pay less. Almost all group participants (which is actually most of us) will see lower costs. Those with gold-plated plans will either change plans to get lower prices, or pay an excise tax and see costs rise. But, that is a fairly small number. So, overall, most people will spend less than they do now.

[Anonymous]

but who buys individual premiums?

[Anonymous]

Anonymous wrote:but who buys individual premiums?

People who can't get coverage through their employer or through some other organizational affiliation. Currently, they get screwed when they apply for coverage.

[Anonymous]

Anonymous wrote:but who buys individual premiums?

LOTS of people. Almost everyone that works hourly jobs that has health insurance. If you work for a small business owner, they probably don't offer health insurance.

[Anonymous]

yes, but as a percentage of all those who have health insurance. I want to know how it affects ALL of us. If say, the 20% who buy individual premiums get a slightly lower cost but the 80% of us who have employer plans get higher premiums does that equate to lower costs? no. Now I recognize the whole point is to provide coverage for those who don't have it, but that costs a lot of money we don't have so lets not pretend this is a costs savings.

[Anonymous]

Anonymous wrote:yes, but as a percentage of all those who have health insurance. I want to know how it affects ALL of us. If say, the 20% who buy individual premiums get a slightly lower cost but the 80% of us who have employer plans get higher premiums does that equate to lower costs? no. Now I recognize the whole point is to provide coverage for those who don't have it, but that costs a lot of money we don't have so lets not pretend this is a costs savings.

I might add that subsidies come from someplace - our tax dollars. So if the premium is artificially lowered due to subsidies, are we really saving any money?

[Anonymous]

Anonymous wrote:

Anonymous wrote:yes, but as a percentage of all those who have health insurance. I want to know how it affects ALL of us. If say, the 20% who buy individual premiums get a slightly lower cost but the 80% of us who have employer plans get higher premiums does that equate to lower costs? no. Now I recognize the whole point is to provide coverage for those who don't have it, but that costs a lot of money we don't have so lets not pretend this is a costs savings.

I might add that subsidies come from someplace - our tax dollars. So if the premium is artificially lowered due to subsidies, are we really saving any money?

According to the NY Times:

The subsidies, a main feature of the bill, would cost the government nearly $450 billion in the next 10 years and would cover nearly two-thirds of premiums for people who receive them.

http://www.nytimes.com/2009/12/01/health/policy/01health.html

[Anonymous]

Anonymous wrote:

Anonymous wrote:yes, but as a percentage of all those who have health insurance. I want to know how it affects ALL of us. If say, the 20% who buy individual premiums get a slightly lower cost but the 80% of us who have employer plans get higher premiums does that equate to lower costs? no. Now I recognize the whole point is to provide coverage for those who don't have it, but that costs a lot of money we don't have so lets not pretend this is a costs savings.

I might add that subsidies come from someplace - our tax dollars. So if the premium is artificially lowered due to subsidies, are we really saving any money?

Right now we're subsidizing all those people without insurance who use the emergency room for their doctor via hidden health insurance costs. I'd rather give them money for insurance so they can see a primary care physician and cut costs overall.

[jsteele]

Anonymous wrote:yes, but as a percentage of all those who have health insurance. I want to know how it affects ALL of us. If say, the 20% who buy individual premiums get a slightly lower cost but the 80% of us who have employer plans get higher premiums does that equate to lower costs? no. Now I recognize the whole point is to provide coverage for those who don't have it, but that costs a lot of money we don't have so lets not pretend this is a costs savings.

The CBO report clearly says (and I mentioned it my original post) that both small and large group plans will have decreased costs. It's impossible to say whether members of group plans will see reduced costs because there is no way to know whether employers will pass on those savings. But, the cost of the plans will decrease. I don't know where you got the idea that employer plans will have higher premiums. The opposite is true.

People with gold-plated plans (a very low percentage) will get charged an excise tax. The CBO expects many of them will switch to plans that aren't taxed. So, unless you are one of the few with a high-value plan, either you or your employer will likely save money.

[Anonymous]

jsteele wrote:

People with gold-plated plans (a very low percentage) will get charged an excise tax. The CBO expects many of them will switch to plans that aren't taxed. So, unless you are one of the few with a high-value plan, either you or your employer will likely save money.

19% in 2016 according to the CBO. When will legislators ever learn that if you are going to arbitrarily pick a number as "gold plated" you need to index it for inflation? The Alternative Minimum Tax is a sterling example of this shortsightedness.

[jsteele]

Anonymous wrote:
19% in 2016 according to the CBO. When will legislators ever learn that if you are going to arbitrarily pick a number as "gold plated" you need to index it for inflation? The Alternative Minimum Tax is a sterling example of this shortsightedness.

Ah, but you didn't read carefully enough. That 19% figure is arrived at under current law. But, if the reforms past, current law will be changed. Here is how they summarize things:

"On net, CBO and JCT estimate that the excise tax and the resulting behavioral changes, incorporating the changes in premiums for employer-sponsored insurance that were discussed earlier in this analysis, would reduce average premiums among the 19 percent of policies affected by the tax by about 9 percent to 12 percent in 2016." Basically, they are predicting that enough people will move to non-taxed plans that the average for the group will be lower. Also, the tax is indexed to inflation.

[Anonymous]

Correct me if I am wrong, but if you change behavior via this excise tax (people move to less expensive insurance plans) are you not losing some coverages you have now? So of the 19% with the best insurance, about half of them will have less comprehensive insurance due to the excise tax?

[jsteele]

Anonymous wrote:Correct me if I am wrong, but if you change behavior via this excise tax (people move to less expensive insurance plans) are you not losing some coverages you have now? So of the 19% with the best insurance, about half of them will have less comprehensive insurance due to the excise tax?

Yes. That's true. But, that's their choice. They may switch to insurance which is less comprehensive, but comprehensive enough. Also, it's not necessarily the "best insurance" that get's taxed, but the most expensive insurance. Theoretically, some people may be overpaying and not getting their money's worth at the moment. In that case, their coverage may not be significantly reduced.

[Anonymous]

jsteele, you make me smile. Your answer brings to mind the expression "lipstick on a pig" - thanks for making my day brighter

[Anonymous]

"Yes. That's true. But, that's their choice."

Wait a minute. How come some people can "choose" to pay less for less coverage but others may not choose to remain uncovered (when they are young and reasonably healthy) thanks to the proposed mandate that all must carry insurance?