The American Spectator

AmSpecBlog

Study: Baucus Bill Would Drive Up Cost of Insurance

By Philip Klein on 10.12.09 @ 10:30AM

The Senate Finance Committee's health care bill would increase the cost of an average family's insurance policy by $4,000 more than it would rise to if we were to maintain the status quo, according to a study by PricewaterhouseCoopers, which was commissioned by insurance industry lobbyist America's Health Insurance Plans (AHIP).

The report highlighted four elements of the bill likely to increase premiums: requirements that insurers cover everybody with preexisting conditions; a tax on high-end health plans; cuts to Medicare that will cause cost-shifting onto private plans; and new taxes on medical device makers, drug manufacturers and insurance companies.

The cost of private insurance, according to the study, will rise, "79 percent between 2009 and 2019 under the current system and during this same period if these four provisions are implemented." In dollar terms, the report projects that by 2019, an average family policy would cost $25,900 annually, as opposed to $21,900 if we did nothing. For an individual policy, those numbers would be $9,700 and $8,200, respectively.

Given that study was commissioned by the insurance industry, it should be taken in with a grain of salt, especially because it also argues that costs will increase because there isn't a stronger individual mandate -- a goal of insurers. I'd take issue with this, because for a young and healthy individual who chooses not to purchase insurance, their annual premiums are currently $0 and merely being forced to purchase insurance would increase their costs dramatically.

Liberal health care journalist Jonathan Cohn also questions a number of assumptions in the report and asks, "Is the Insurance Industry Declaring War?" One of the stories of the health care debate has been that in contrast to 1993/94, until this point AHIP has been either cooperative or muted in its criticism of the bills, deciding instead to try to get the best deal that they could out of the government. But now that they felt betrayed in many ways by Max Baucus Finance Committee bill, they may be poised to take a more combative role.