CBO says premiums would fall for individuals getting subsidized coverage

By Julie Appleby
KHN Staff Writer

The Senate Democrats’ health care overhaul bill would substantially reduce premium costs for 57 percent of people who buy subsidized coverage through new exchanges, while rates would hold steady or decline slightly for large and small employers, a long awaited analysis from the Congressional Budget Office showed Monday.

People who buy their own coverage but don’t qualify for government subsidies, however, could see increases of 10 percent to 13 percent, mainly because the coverage offered in the exchanges would cover more benefits compared with what is currently purchased, and thus would be more expensive.

The analysis compares rates with what they would be under current laws, and focuses on 2016 as the time when the provisions of the new legislation would be fully implemented.

The report is expected to provide ammunition for both sides of the debate, with opponents using it to argue that premiums would go up for some people, while supporters saying it shows the combination of subsidies and pulling more people into the market would moderate premiums for many.

The report’s findings include:

• Premiums paid by large employers would hold steady or drop by up to 3 percent. Because most insured people get coverage through their jobs, the CBO estimates large employers will represent 70 percent of the market in 2016.
• Small employers, representing 13 percent of the market, would see a range of effects, with premiums falling by up to 2 percent or rising by 1 percent. About 12 percent of very small employers – those with generally lower wages – would qualify for tax credits, causing premiums to fall by 8 percent to 11 percent.
• Individuals who buy their own coverage – estimated to be about 17 percent of the market by 2016 – would see rates rise on average by 10 percent to 13 percent. But 57 percent of those forecast to buy through the exchanges would have incomes qualifying them for subsidies, which would bring their rates down by 56 percent to 59 percent.
• About 19 percent of workers would have plans that exceed the thresholds for a “Cadillac plan,” meaning the insurers would face a 40 percent excise tax. However, changes to those plans by employers and other factors are likely to reduce premiums for those plans by 9 percent to 12 percent.

To learn more:

• Read the Full Report here.

Tags: Health-care Reform, KaiserHealthNews

Category: Healthcare Reform