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Senate health bill wouldn't increase insurance costs for most, CBO says
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"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," Bayh said in a statement. "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."
The CBO found that the measure would have its most dramatic impact on the individual market. Because they are not part of a workforce or other group that can pool its risk, consumers tend to pay more for policies with fewer benefits. The Senate bill would address that by establishing insurance exchanges, effectively creating risk pools. It would limit premiums based on age and medical condition, and cut costs for insurers by adding younger, healthier people to the customer base. All those provisions would lower premiums by as much as 20 percent, on average, by 2016, the CBO said.
For many people, those savings would be offset, however, by new standards for minimum coverage that would require newly offered policies to be significantly more generous than many are now. While people who currently have coverage would be permitted to keep it, the CBO predicts that few would choose to do so. As a result, for the 32 million people in the individual market, premiums would be 10 percent to 13 percent higher, on average, than under current law, climbing to $5,800 a year for individuals and $15,200 for family coverage.
However, six in 10 purchasers in that market would receive federal subsidies that would cover about two-thirds of the cost, the CBO said, so they would pay 60 percent less for insurance than if the legislation had not been enacted.
The benefits would be much less dramatic for the approximately 160 million people who receive coverage in the small and large group markets, the CBO said, leaving the average premium essentially unchanged or as much as 3 percent lower.
"This is not delivering huge premiums savings to the insured" in the short term, agreed Massachusetts Institute of Technology economist Jonathan Gruber, an advocate of reform. "But the flip side is that here's a bill that reduces the deficit, covers 30 million people and has the promise of lowering premiums in the long run."
Staff writer Shailagh Murray contributed to this report.