The CBO report on premiums

I was at the gym yesterday, and a friend asked me what would happen to his insurance premiums under health care reform.  He didn’t seem too thrilled when I told him that many people would see no difference.  Part of keeping what you like means… keeping what you have.  But don’t take my word for it.  The CBO released a report on what would likely happen to insurance premiums under reform.  Here’s the gist:

Group coverage from employers

  • This is what most people who get insurance through their jobs have.  The CBO says that in 2016, the average small group market premium would be around$7,800 for an individual and $19,200 for a family.  Without reform, these numbers would be about $7,800 and $19,300. In the large group market, it’s about$7,300 for an individual and $20,100 for a family with reform, and about $7,400 and $20,300 without.  Not much difference at all.
  • Additionally, some people (about 12 percent) with coverage in the small group market would get a small business tax credit.  For them, insurance would be about 8 percent to 11 percent lowerthan without reform.

Nongroup (individual) policies

  • These are the policies people would get on the exchange.  In 2016, the average individual policy under reform would be about $5,800 and a family policy would be about $15,200, compared to about $5,500 for an individual and $13,100 for a family without reform.
  • Most of those people (about 57 percent) would get subsidies, which would cover about two-thirds of the total premiums.
  • Now that’s an increase without the premiums, but most people would see a significant increase int he quality of their insurance.  That increase in quality is more than the increase in the cost.  So they still reported it’s a reduction in cost overall.

Se here’s the recap.  For most people there is going to be no difference in the cost of premiums.  Some will benefit slightly from the small business tax credit.  For people in the individual (nongroup) market, actual premiums might rise, but less than the increase in value of their insurance.  Moreover, most of them will be getting financial assistance, so that even so – the cost to them will go down.

Yes, it’s confusing, but likely good news for the administration.

The bad part, however, is that they estimate that the average premium for a family employer-provided plan will be over $19,000 in 2016.  Now it’s just over $13,000.  That’s a big increase.  And it’s still a huge amount of money.  This bill will do very little to contain costs.

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