The Spectacle Blog

CBO: Senate Health Care Bill Would Raise Premiums 10-13 Percent

By on 11.30.09 | 11:41AM

In another blow to Democrats' health care claims, the Congressional Budget Office released an analysis on Monday projecting that the Senate health care bill would raise premiums by more than $2,000 on family policies compared to what the cost otherwise would be if Congress were simply to do nothing.

The report, prepared at the request of Sen. Evan Bayh, found that premiums on policies individuals purchase on their own or through the government-run exchanges would cost 10 percent to 13 percent more in 2016 than under current law. In dollar terms, in 2016 an individual policy would cost $5,800 and a family policy would cost $15,200 if the Senate bill were enacted, according to the CBO, compared with $5,500 and $13,100 under the status quo.

In an appearance on Fox News Sunday, Bayh, a moderate Democrat from Indiana, said that the CBO report would figure prominently in his decision making process as he evaluates whether he should support the legislation.

"I'm going to be looking at - and we haven't gotten the score from the CBO yet; they're about to give it to us - what does this do for the cost of insurance for people who currently have it," Bayh said. "We want to cover the uninsured, yes, but we don't want to do it in a way that's going to drive up the costs for folks who currently have it. That's one of the biggest complaints that I hear from people. So I'm going to be looking very carefully at what the bean counters have to say about that."

The major driver of the increased premium costs are the new mandates that will force insurers to offer more comprehensive coverage, and effectively bar individuals from purchasing less benefit rich insurance at a lower price.

The CBO said the legislation would have less of an affect on group coverage -- small employers may see their premiums go up 1 percent or down 2 percent, while larger employers could see no change, or see their premiums go down 3 percent.

From the start of the process, one of primary rationales President Obama has given for the urgent need to pass health care legislation is that the cost of premiums are skyrocketing, and putting more pressure on family budgets. In a speech to the American Medical Association in June, Obama declared that, "if we fail to act, premiums will climb higher." Now the CBO has estimated that if we do act -- at least in the way Democrats are proposing -- premiums will climb even higher than the unsustainable levels that supposedly prompted the drive for reform in the first place.

Earlier this month, the actuary at the Centers for Medicare and Medicaid Services found that the bill passed by the House would raise overall health care spending in the United States, despite pledges to the contrary.

UPDATE: TNR's Jonathan Cohn, via Twitter, asks why I didn't mention the federal subsidies that would more than offset the cost of the increased premiums for about 57 percent of those obtaining insurance on their own. The reason I didn't is that the subsidies do not change the underlying cost of the policies -- the only difference is that other taxpayers are picking up the rest of the higher tab. And 14 million Americans who earn too much to qualify for subsidies (the cutoff is $43,320 for individuals; $88,000 for a family of four) would see their premiums go up. The point is that when the health care push began, we were led to believe that legislation would reduce the economic burden of health care costs by lowering premiums and containing the growth of health care spending. But the current legislation does not accomplish that goal. If liberals still want to argue that helping more Americans obtain coverage is worth the costs, that's fine. But saying that government will subsidize the higher premium costs created by health care legislation is a far cry from boasting that reforming our health care system will lower the actual price of insurance.

With that said, rereading my post, I realize that the way I phrased things originally made it sound as if anybody purchasing insurance on their own would personally be paying more for insurance than under the status quo, and that wouldn't be the case for those receiving subsidies -- regardless of whether their costs are ultimately borne by others. I just went back and tweaked the language.

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