HEALTHCARE - Evidence Keeps Mounting FOR Reform

"No Big Cost Rise in U.S. Premiums Is Seen in Study" by ROBERT PEAR & DAVID M. HERSZENHORN, New York Times

The Congressional Budget Office said Monday that the Senate health bill could significantly reduce costs for many people who buy health insurance on their own, and that it would not substantially change premiums for the vast numbers of Americans who receive coverage from large employers.

The eagerly awaited report, which came as the Senate began debate on the legislation, provided Democrats with ammunition against Republicans who have criticized the bill on the ground that it would raise costs for a majority of Americans.

Centrist Democrats like Senator Evan Bayh of Indiana, whose votes are vital to President Obama’s hopes of getting the bill approved, had feared that the measure would drive up costs for people with employer-sponsored coverage. After reading the budget office report, Mr. Bayh said he was reassured on that point.

Before taking account of federal subsidies to help people buy insurance on their own, the budget office said the bill would tend to drive up premiums. But as a result of the subsidies, it said, most people in the individual insurance market would see their costs decline, compared with the costs expected under current law. The subsidies, a main feature of the bill, would cost the government nearly $450 billion in the next 10 years and would cover nearly two-thirds of premiums for people who receive them.

For most people who get health insurance through employers — five-sixths of the total market — the budget office concluded that there would be little change in their premiums relative to the amounts projected under current law.

Administration officials said the report provided a lift to the bill, which embodies Mr. Obama’s top domestic priority.

“The C.B.O. has rendered a fundamental judgment that this will reduce the deficit and reduce people’s premium costs,” said Rahm Emanuel, the White House chief of staff, who huddled with Senate Democratic leaders on Capitol Hill on Monday. “All the Republican leadership will guarantee you is the status quo.”

But Republican senators like Charles E. Grassley of Iowa and Mitch McConnell of Kentucky, the minority leader, said the report validated their concerns. They focused on the prediction that unsubsidized premiums in the individual insurance market, less than a fifth of those with health insurance, would rise an average of 10 percent to 13 percent.

“The analysis by the Congressional Budget Office confirms our worst fears,” Mr. Grassley said. “Millions of people who are expecting lower costs as a result of health reform will end up paying more in the form of higher premiums. For large and small employers that have been struggling for years with skyrocketing health insurance premiums, C.B.O. concludes this bill will do little, if anything, to provide relief.”

The Senate majority leader, Harry Reid, Democrat of Nevada, said the highly partisan floor debate that opened Monday afternoon was one of the most significant in the history of the Senate. It is expected to continue for much of December, with supporters and opponents alike offering a raft of amendments as the White House and Democratic leaders seek to put together the 60-vote coalition necessary to win passage.

Administration officials continued to reach out to lawmakers in both parties to try to build support. Senator Susan Collins, Republican of Maine, said she met Monday for 45 minutes with Nancy-Ann DeParle, director of the White House Office of Health Reform, to discuss her concerns about the legislation.

In its report, the budget office compared estimates of premiums in 2016 under the new legislation and under current law. In either case, after seven years of inflation, premiums would be substantially higher than they are today.

The budget office said the analysis of premiums was extremely complex, so the experience of individuals and families "could vary significantly from the average.”

“In general,” it said, “the proposal would tend to increase premiums for people who are young and relatively healthy, and decrease premiums for those who are older and relatively unhealthy.”

Under the legislation, it said, the average premium per person in the individual insurance market would be 10 percent to 13 percent higher than under current law. But, it said, most people in this market — 18 million of the 32 million people buying insurance on their own — would qualify for federal subsidies, which would reduce their costs well below what they would have to pay under current law.

For people receiving subsidies, the budget office said, premiums would be 56 percent to 59 percent lower than under current law.

Without subsidies, it said, premiums under the bill would average $5,800 a year for individuals and $15,200 a year for families buying coverage on their own. Under current law, the comparable figures would be $5,500 and $13,100.

“This study indicates that, for most Americans, the bill will have a modestly positive impact on their premium costs,” Mr. Bayh said. “For the remainder, more will see their costs go down than up.”

Under the bill, the budget office said, individual policies would have to provide more benefits and pay a larger share of costs than most existing policies do. In other words, it said, some people would pay more, but would also get more.

Insurers, it said, would have to cover certain services that, in many cases, are not covered by existing policies in the individual insurance market. These include maternity care, prescription drugs, mental health services and substance abuse treatment. Moreover, it said, under the legislation, insurance would cover an average of 72 percent of medical costs for people buying insurance on their own, up from 60 percent under current law.

The budget office said it foresaw “smaller effects on premiums for employment-based coverage.”

In groups with 50 or fewer employees, it said, unsubsidized premiums in 2016 would average $7,800 a year for individuals and $19,200 for families — scarcely any different from the amounts expected under current law. Of the 25 million people receiving coverage from small businesses, it said, 3 million would qualify for subsidies, which would reduce their premiums by an average of 8 percent to 11 percent.

Large employers would generally not be eligible for such assistance. Their premiums in 2016 under the bill would average $7,300 for individual coverage and $20,100 for family coverage, the report said. Under current law, the comparable figures would be $7,400 for individual coverage and $20,300 for family coverage.

The Senate bill would impose an excise tax on high-premium health plans offered by employers. People who remain in such “Cadillac health plans” would pay higher premiums, but most people would avoid the effect of the tax by enrolling in plans with lower premiums, the budget office said.

(from "New CBO Report Undermines Arguments Against Health Reform")(click for larger view)