Premiums Will Go Up. But You'll Probably Pay Less

As we edge (creep, crawl, inch, take baby steps - insert your own word for mollases like progress) closer and closer to passing comprehensive health insurance reform, those of us who support the bills have been hoping that one effect they would have would be to lower the out of pocket costs of buying healthcare.

Well it turns out that most people's day to day costs WILL in fact be lower (phew), but that premiums themselves are likely to go up slightly. How can this be so?

According to CBO, average premiums in the individual market would increase 10 to 13 percent because of provisions in the Senate health care bill, but, crucially, most people (about 57 percent) would actually find themselves paying significantly less money for insurance, thanks to federal subsidies for low- and middle-class consumers, than they would under current law.

Furthermore:

Separately, for those who have high-end employer-provided insurance, CBO finds that a new excise tax on high-end policies will have disparate effects on premiums. Those who keep their "cadillac" insurance would end up paying higher premiums than they do today, and those who choose instead to choose less luxurious policies would pay lower premiums.

"[P]eople who remained in high-premium plans would pay higher premiums under the excise tax than under current law, and people who shifted to lower-premium plans would pay lower premiums under the excise tax than under current law," the report reads.

But CBO also finds that on average, people who have plans susceptible to the 40-percent tax will ultimately be paying less in premiums than they would without health care reform: "On net, CBO and JCT estimate that the excise tax and the resulting behavioral changes...would reduce average premiums among the 19 percent of policies affected by the tax by about 9 percent to 12 percent in 2016."

Senator Evan Bayh, who had requested the CBO report in the first place out of concern that healthcare costs might go up under the proposed Senate legislation, was encouraged by the findings:

This report alleviates a major concern that has been raised--that insurance costs will go up across the board as a result of this legislation.

"This study indicates that for most Americans, the bill will have a modestly positive impact on their premium costs. For the remainder, more will see their costs go down than up. Hopefully, we can continue to focus the Senate debate on additional ways to make health insurance even more affordable for all Americans."