There is much ado about the CBOs letter to Sen. Evan Bayh regarding the impact of the health care reform legislation on future premiums. Keeping mind that one of the main goals of reform is to make health care affordable and to control costs it is curious that virtually no positive impact on future premiums turns out to be a good thing. Based on all the rhetoric one would think that over the next six years the reform efforts would have a substantial impact on the premiums people pay for their health care. Apparently, that is not the case. For example, as you see in this quote from the letter to Sen. Evan Bayh from the CBO, by 2016 they project that the family premium in the large group market would be $200 a year less than under current law which by the way is less than a 1% difference. Other markets have similar modest diffeernces, some up, some down. The Senator asked for this analysis to be sure that what they were doing was not going to increase premiums.
Did I miss something, I thought these 2,000 pages were supposed to control costs. Dare I ask what we actually reformed? Even that $200 is offset by additional administrative costs for employers such as handling the CLASS act long term care enrollment and who knows what else will come from future regualtions.
By CBO and JCT’s estimate, the average premium per policy in the small group market would be in the vicinity of $7,800 for single policies and $19,200 for family policies under the proposal, compared with about $7,800 and $19,300 under current law. In the large group market, average premiums would be roughly $7,300 for single policies and $20,100 for family policies under the proposal, compared with about $7,400 and $20,300 under current law. As in the nongroup market, the effects on the premiums paid by some people for coverage provided through their employer could vary significantly from the average effects on premiums, particularly in the small group market.
However, there is this to consider as well, again from the CBO letter.
Uncertainty Surrounding These Estimates The analysis presented here reflects the cost estimate for the legislation that CBO and JCT provided on November 18. The same substantial degree of uncertainty that surrounds CBO and JCT’s estimates of the impact that the proposal would have on insurance coverage rates and the federal budget also accompanies this analysis of the proposal’s effects on premiums. Some components of those effects are relatively straightforward to estimate, such as the effect of imposing specific fees or the effect of a change in the amount of coverage purchased because of requirements for minimum coverage; however, estimating effects that depend heavily on how enrollees, insurers, employers, or other key actors would respond—to such things as the changes in the market rules for nongroup policies or the excise tax on high-premium policies—involve greater uncertainty. The projections of average premiums in each market under current law are also uncertain.
[picapp align=”left” wrap=”false” link=”term=bayh&iid=4936769″ src=”3/1/7/f/The_International_Trade_cc69.JPG?adImageId=7972706&imageId=4936769″ width=”400″ height=”280″ /]Close enough for government work
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