Kaiser Health News –

Feb. 23: State insurance regulators said President Barack Obama goes too far with his proposal Monday to give the federal government new power to reject health insurance rate increases.

Three veteran state insurance commissioners said in interviews that states are in a better position to judge insurers’ premium proposals. But two of the commissioners, Sandy Praeger of Kansas and Kim Holland of Oklahoma, said they’d welcome federal advisory help. Pennsylvania’s commissioner, Joel Ario, said the federal government could also help set standards for states to use in reviewing insurance rates.

States regulate health insurance, although they vary widely on the minimum level of coverage they require of insurers and financial solvency requirements. More than half the states allow insurers to implement rate increases without first obtaining state approval.

Ario said if states and the federal government try to share the responsibility it could pose a problem because it would be unclear who has the ultimate authority. “It could end up as a ‘who’s on first and what’s on second’ problem,” he said.

He was appointed by Democratic Gov. Edward Rendell. Holland, a Democrat, and Praeger, a Republican and former president of the National Association of Insurance Commissioners, were both elected.

Obama’s proposal to create a Health Insurance Rate Authority was included in his 11-page health plan that attempts to merge the health bills passed by the House and Senate last year and restart legislative efforts to pass overhaul legislation. His proposal said the authority would “provide needed oversight at the federal level and help states determine how rate review will be enforced and monitor insurance market behavior.”

Under the plan, “if a rate increase is unreasonable and unjustified, health insurers must lower premiums, provide rebates, or take other actions to make premiums affordable,” the proposal said.

Obama’s plan lacked details about how the federal rate authority would work, or for how long. Under the House and Senate health bills, individual health insurance would be sold through exchanges, marketplaces that would set standards for plans and oversee rates. The president’s plan sided with the Senate version that calls for state-based exchanges instead of one large national exchange as in the House bill. The exchanges would not start until 2013.

The new federal authority goes beyond what’s contained in either the Senate or House bills. In the past two weeks, Obama administration officials have tried to build public outrage over recent insurance rate hikes in the individual health insurance market, especially a 39 percent increase sought by Anthem Blue Cross of California, the largest for-profit health insurer in that state. Last week, the insurer agreed to postpone the increases until May 1.

Efforts to pass legislation stalled a month ago after the Democrats lost their filibuster-proof majority in the Senate with the election of Massachusetts Sen. Scott Brown, a Republican.

America’s Health Insurance Plans, the health insurers’ major lobbying group, said Monday the White House is spending too much time focusing on premium increases in the individual insurance market, which affects seven percent of those with private coverage. The group said blocking rate increases doesn’t do anything to resolve their underlying cause: rising medical costs and increased use of medical services.

The Blue Cross and Blue Shield Association said, “This new agency, which creates a highly politicized federal review process, would divorce premium review from the state regulators’ responsibility of assuring that health plans have enough funds to pay future policyholder claims, potentially leading to multi-plan insolvencies across the country.”

Praeger and Holland said creating a federal rate authority would not deal with the problems driving higher premiums. “If you want to keep costs under control, it’s not about managing health care premiums,” Praeger said, “it’s about managing the underlying health care costs.”

Holland defended state regulation of insurance. “Health insurance is very localized and states already have a number of tools to monitor rates,” she said. “Overall, I think state regulators do a good job.”


In California, Exhibit A in Debate on Insurance

New York Times February 16, 2010

LOS ANGELES — When Bernhard Punzet opened the dreaded envelope from Anthem Blue Cross one recent Saturday, it ruined his weekend.

Although he had no known medical problems, the company was raising the premium on his individual health insurance policy by 34 percent, to $254 a month. The policy for his partner, who is 12 years older, would rise 36 percent, to $369.

“Ten percent I could have rationalized,” said Mr. Punzet, 34, a financial controller for a Los Angeles recruiting firm. “But a 34 percent increase? I don’t even have any data points for that, nothing to compare it to. I’ve never seen anything go up 34 percent.”

With health care negotiations stalled in Washington, the Obama administration is seizing on the seething fury felt by Mr. Punzet and nearly 700,000 other Anthem customers in California who have received notices of increases that average 25 percent. About a quarter of them are seeing leaps of 35 percent to 39 percent, the company said, at least four times the rate of medical inflation.

At a moment when the health care debate seemed drained of urgency, the rate increases have permitted Mr. Obama to remind Americans of what is at stake, not just for the uninsured but for those whose coverage is threatened by unregulated hyperinflation.

The spike in Anthem’s premiums, Mr. Obama warned last week, were “just a preview of coming attractions” if the country failed to overhaul its health insurance system.

But if Anthem was the whipping boy the White House needed, the confrontation has also reinforced an emerging shift of focus in Washington from the need for universal coverage to the need for serious cost control. And it brought into clear relief the deep rift between the administration and the insurance industry concerning a central question: whether such unsustainable pricing is driven by the bloodless economics of risk or a corporate culture of greed.

Recognizing a no-lose proposition when they see one, politicians in Sacramento and Washington chastised Anthem relentlessly last week, and hearings are scheduled in both capitals. On Saturday, Anthem’s parent company, WellPoint Inc. of Indianapolis, agreed to a request from California’s insurance commissioner to delay the increases by two months, to May 1, so he could determine whether they comply with loss-ratio regulations.

Health and Human Services Secretary Kathleen Sebelius challenged the company to justify its “extraordinary” rate increases and, when it did in a five-page letter, volleyed that she was not satisfied. She expressed indignation that some of Anthem’s increases would be up to 15 times the rate of inflation, and that WellPoint had earned $2.7 billion in the fourth quarter of 2009.

“Too many Americans are at the whim of private, for-profit insurance companies who are raking in billions in profits each year,” Ms. Sebelius wrote on the White House blog.

She did not mention that most of WellPoint’s fourth-quarter surge came from the one-time sale of a business unit or that Anthem lost money on the individual market in California last year, as company officials assert. California’s insurance commissioner, Steve Poizner, said Saturday that he had a “healthy skepticism” about the claim.

Although Anthem, the state’s largest for-profit insurer, has seemed outmaneuvered by the White House so far, it has tried to transform its defensive position into a teachable moment.

In statements and letters, Anthem and WellPoint have explained what the industry calls a recessionary death spiral: as unemployment and declining wages prompt healthy people to drop their insurance, the remaining risk pool becomes sicker and more expensive to insure, which in turn forces up prices and pushes more people out of the market.

A study released this week found that the five largest health insurance companies collectively lost 2.7 million customers last year, including 1.4 million by WellPoint. Yet they reported record profits of $12.2 billion.

The death spiral “highlights why we need sustainable health care reform to manage the steadily rising costs of hospitals, drugs and doctors,” Anthem, which is based in Los Angeles, said in a statement.

To many in recession-racked California, however, the Obama administration’s populist rhetoric has sounded pitch perfect.

“As a trial lawyer, I’d make it Exhibit A,” said Joshua C. Needle, 57, of Santa Monica, whose premium is rising 33 percent. “I have no problem with profits, but they’re maximizing profits without any concern that they have a captive audience.”

Mr. Needle, like many of the 13 million Americans who buy insurance individually rather than through employers, cannot shop for a better deal because he has medical conditions like high cholesterol and glaucoma that would probably disqualify him with other carriers.

Once accepted by an insurer, consumers cannot be dropped for medical reasons. But in California, where Anthem controls more than half of the individual market, regulators have little power to prevent insurers from raising individual rates as high as the market will bear. That often forces consumers to move to less-generous policies with higher deductibles in order to hold down their costs.

Mr. Poizner, who is running for governor in the Republican primary, has hired actuaries to study whether Anthem is spending at least 70 percent of premium revenues on claims, as required by state regulations. WellPoint officials said they were confident that Anthem exceeded the threshold.

In the health care bills that have passed each chamber, but not been reconciled, Congressional Democrats would attack the cost of premiums in several ways. Everyone would be required to have health insurance, spreading risk among larger pools. Health insurance marketplaces, or exchanges, would force insurers to compete more transparently. Insurers would be prohibited from denying or canceling coverage because of medical conditions, and would be forced to spend at least 80 percent of premiums on claims.

Paradoxically, since WellPoint has lobbied vigorously against the legislation, the company argued last week that its “unfortunate but necessary” rate increases demonstrated the need for a major fix.

But the company found fault with the Democrats’ proposals, particularly what it sees as soft enforcement of a health insurance mandate that would allow millions of people to remain uninsured. Only if everyone is covered, the insurance industry argues, can it spread its risks sufficiently to stop rejecting those with pre-existing conditions.

“The reform being discussed in Washington will not do anything to address the underlying increases in costs,” said Brian A. Sassi, president of consumer business for WellPoint.

Medical costs have typically risen by 5 percent to 10 percent during each of the last five years. Mr. Poizner said he was starting to see significant increases for individual policies sold by some of Anthem’s competitors, and double-digit increases have been reported in other states.

Several insurance analysts said it was possible, but not necessarily likely, that such increases would become common, at least while the economic downturn persists. Insurance brokers in Los Angeles said they had never seen jumps of such magnitude.

“It’s more astonishment than irritation,” a Pasadena broker, John W. Barrett, said of the reaction from his customers. “Irritation was last year and the year before. Now they’re astonished.”


Sebelius, WellPoint Continue Battle Over California Rates

Published 2/12/2010

WellPoint Inc. (NYSE:WLP) says the cost of providing individual health insurance in California is soaring, but a federal regulator says the company should be using its national profits to hold down premium increases.

Anthem Blue Cross of California, a unit of WellPoint, Indianapolis, recently announced that it would be increasing premiums for some California individual health insurance customers by as much as 39%. The increases are set to take effect March 1.

California Insurance Commissioner Steve Poizner asked Anthem to postpone the increase, to give an independent actuary time to verify whether the increase is justified.

Kathleen Sebelius, the U.S. secretary of Health and Human Services and former Kansas insurance commissioner, wrote to ask Anthem Blue Cross executives for an explanation of the increase, and she suggested that the proposed increase shows why the United States health reform.

Now WellPoint and Sebelius have fired off new letters.

Brian Sassi, president of the consumer business unit at WellPoint, writes to Sebelius that WellPoint’s profit margins in California are a little lower the profit margins of competitors in the state.

Anthem earned $12.62 per member per month in 2008, compared with an average of $1.845 per member per month at one nonprofit competitor and $13.22 per member per month at another.

Only about 10% of Anthem’s health insurance customers in California are individual health insurance policyholders, and the proposed 39% increase that is getting most of the media attention affects a relatively small percentage of individual policyholders who insist on sticking with their current policies and will be changing age categories, Sassi writes.

“The rate changes excluding the impact of age-category changes range from a 20.4% decrease to a 34.9% increase,” Sassi writes.

Many individual insurance policyholders can reduce the effects of the proposed premiums increases by changing products, Sassi adds.

WellPoint welcomes the California Department of Insurance review of the rate increases and believes it can show why the increases are actuarially sound and necessary, Sassi writes.

“Rate increases reflect the increasing underlying medical costs in the delivery system, which are unsustainable,” Sassi writes.

Overall health insurance rates are increasing because of factors such as increases in provider prices and the aging of the population, but other factors are accounting for the rapid increases in the California individual health insurance market, Sassi writes.

When the economy is bad, only the sickest individuals choose to keep paying for individual health coverage, and that means the insureds remaining in the pool use more services, Sassi writes.

Meanwhile, Sassi writes, the healthier insureds who are keeping their coverage are migrating toward the cheaper, higher deductible policies, and that makes the risk profile of the insureds who are sticking with the lower-deductible policies look even worse.

“Other individual market health insurers are facing the same dynamics and are being forced to take similar actions,” Sassi warns.

To prevent antiselection in the individual health insurance market, WellPoint believes that Congress must require all Americans to have some kind of health coverage, provide subsidies for people who have serious trouble paying for coverage, and impose significant penalties on individuals who go without coverage, Sassi writes.

Sebelius does not discuss the state of the California insurance health insurance market in her reply, but she notes that WellPoint as a whole reported $2.7 billion in net income for the fourth quarter of 2009.

“It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured,” Sebelius writes. “High health care costs alone cannot account for a premium increase that is 10 times higher than national health spending growth.”

The Anthem decision to raise rates demonstrates the need for reforming the health insurance system, Sebelius writes.

“Reform will end the worst insurance company practices and put doctors and patients — not insurance companies — in charge of medical decisions,” Sebelius writes. “If we fail to implement reform, insurance companies will continue to prosper while families will continue to struggle


COBRA Extension in the Works

Virtual Water Cooler, February 10, 2010

Bill Kenealy

Another extension to subsidies to the Consolidated Omnibus Budget Reconciliation Act (COBRA) is contained a pending jobs bill.

According to the version of the bill currently circulating around Capitol Hill, the 65% premium subsidy available to employees involuntarily terminated from Sept. 1, 2008 through Feb. 28, 2010, would be extended until May 31, 2010. However, the duration laid off workers are eligible to receive benefits remains at 15 months.

Given the nation’s continuing high unemployment rate another COBRA subsidy extension is likely to receive broad support in Congress, and key lawmakers such as Senate Majority Leader Harry Reid, (D-Nev.) and Finance Committee Chairman Max Baucus (D-Mont.) are said to be backing an extension.


If Healthcare Dies, Obama’s Modest Budget Plan B

Associated Press –

Feb. 2: Washington – President Barack Obama’s modest health care budget may be a harbinger of what’s ahead if his overhaul plan dies in Congress. The budget released Monday contains lots of respectable ideas to squeeze savings, expand coverage and improve quality, but no ambitious change that launches the nation on a path to health care for all.

“It doesn’t change dramatically the cost trajectory or fill the coverage gap,” said Health and Human Services Secretary Kathleen Sebelius. With costs widely acknowledged to be growing at budget-busting rates, the $915 billion health spending plan for 2011 would hire more fraud detectives to root out waste and outright thievery in Medicare and Medicaid, the two giant insurance programs for seniors and the poor. The budget would increase spending in one major anti-fraud area by 80 percent, part of a strategy the administration estimates could save taxpayers about $10 billion over 10 years.

As unemployment remains high and people continue to lose jobs with health insurance, the budget provides an emergency infusion of $25.5 billion to help state Medicaid programs cope with swelling enrollment in a period of slack revenues. It would also pump another $290 million to community health centers, frontline medical providers for many of the nearly 50 million uninsured.

As for quality improvements, the budget would start a host of experiments on how to improve care for seniors with multiple chronic health problems, who account for a disproportionate share of what Medicare spends annually. It also would provide a funding boost for a new field of research that aims to determine which medical treatments are most effective for the costliest conditions. Speeding the adoption of computerized medical records is another priority. All in all, Sebelius called the budget “a platform” a beginning, not an end.

She said she hopes lawmakers will revive the health care bills sidelined after Democrats lost their 60-seat majority in the Senate, and undisputed control of the congressional agenda. “I think we need both,” she said.

The health care overhaul legislation would provide coverage to more than 30 million now uninsured. It wouldn’t add to the federal deficit, but it would increase health care spending as people used their new coverage. However, in the long run, some of the cost control measures would slow the pace of annual increases, offering the promise of savings.

As a technical matter an asterisk Obama’s budget assumes the health care remake will pass Congress, generating $150 billion in savings over 10 years.

Most of the government’s health care spending in any given year nearly $832 billion of the total for 2011 is on autopilot, allocated to Medicare and Medicaid. Congressional Democrats tapped Medicare to finance much of their proposed overhaul legislation, and the deficit-reduction commission Obama is promising in his budget is sure to see it as a source for revenue.

Beyond the big areas of costs and coverage, Obama’s budget provides targeted increases for research, public health and prevention. The National Institutes of Health would get an additional $1 billion for research into such fields as genetic medicine that could produce breakthrough drugs and treatments.

Administration priorities include cancer and autism research. The Food and Drug Administration’s budget for food safety cut under President George W. Bush gets a 30 percent, $327 million boost.

And revenues from a tobacco tax hike that Obama signed into law last year will be pumped into a campaign to prevent teens from taking up the habit.

Finally, there’s also a $383-million health care hit in the budget. Obama is proposing to eliminate congressional earmarks for building hospitals and other facilities, including $10 million for Alaska and $35 million for Mississippi.


Poll Shows Growing Fears on Healthcare Overhaul

Associated Press –

Jan. 25: Washington – Fears about President Barack Obama’s health care overhaul increased significantly in December, according to a new poll released as the legislation’s future hangs in doubt. The monthly poll out Monday from the nonpartisan Robert Wood Johnson Foundation measured consumers’ views of how a remake would affect their own finances and access to care, among other things.

It was conducted between Nov. 28 and Dec. 20, in the run-up to the Senate’s Christmas Eve passage of sweeping health care legislation that brought Congress closer than ever before to enacting a comprehensive revamp of the nation’s medical system. That effort was cast into turmoil last week when a GOP victory in Massachusetts’ special Senate election robbed Democrats of their filibuster-proof supermajority.

The survey shows a majority are following the health care debate in Congress and their trepidation is evidently growing as they do.

Nonetheless, people still think that Obama should address the issue as part of dealing with the nation’s economic slump, although the percentage of people who say that it’s very important for Obama to do so has slipped from 56 percent in the survey conducted in September, to 49.5 percent in this month’s report.

Among the poll’s other findings:
– 33 percent of respondents said they believed their access to care would be worse if a health care overhaul occurred, a jump from 25 percent in the poll released last month. Thirteen percent said they thought they would have better access to care in a remade system, about the same as last month.
– 30.5 percent said their personal finances would be worse under a health care overhaul, compared to 24.5 percent last month. Eleven and a half percent said their personal finances would improve, compared to 14 percent last month.
– 35 percent said the country’s access to health care would be worse under a health care overhaul, compared to 30 percent last month. Around 38 percent said it would be better, around the same as last month.
– 42 percent said the country’s finances would suffer under a health care overhaul, compared with 34.6 percent last month. Thirty percent said matters would improve financially, compared to 32 percent last month.

“I don’t know that it’s all that surprising that people are nervous about health care reform,” said Brian Quinn, a researcher at the Robert Wood Johnson Foundation, a philanthropic organization that supports health care reform. “Health care is an incredibly personal issue and clearly there’s a lack of understanding about what health care reform would do.”

The Democratic bills would require all Americans to carry health insurance, with government help to make premiums more affordable. They would ban insurance companies from denying coverage or charging more to people with health problems.
They would set up new insurance markets for those who now have the hardest time finding and keeping coverage — self-employed people and small businesses.

The poll, a monthly status check on views about health care, also found that consumers’ confidence in their health insurance coverage and ability to access care rose slightly in December.

Robert Wood Johnson’s index of consumer health care confidence stood at 99.1 points in December, up from a reading of 96.9 in November. The index uses people’s responses to a series of questions, such as whether they’re worried about affording prescription drugs or going bankrupt from medical bills, to determine an overall confidence score.


How Would a New Health Insurance Pool Work?

Los Angeles Times –

Jan. 11: I hear the healthcare bill will create an immediate insurance pool for people who can’t get insurance. How will this work and who will be eligible?

Both the House and Senate bills would provide $5 billion to create a temporary insurance pool until an insurance exchange is up and running. Under the House bill, this program would be available to people who have a preexisting condition or have been uninsured for at least six months. Under the Senate bill, individuals would have to meet both requirements to be eligible. The House pool would open immediately and the Senate pool would open within 90 days of the bill’s enactment. Both pools would set limits on the premiums and cost-sharing that individuals would have to pay.

How will an insurance exchange work?

An insurance exchange is a marketplace a website, for example where consumers can choose from a range of plans that meet minimum standards set by the government. The Senate bill proposes to create state-based exchanges, while the House bill would create one national exchange. Consumers who don’t get health insurance through their employer or a government insurance program would be eligible to shop on the exchange for plans. Low- and middle-income people who shop on the exchange would be eligible for government subsidies to help them buy their insurance plan.

What is the difference between a bronze plan and a platinum plan?

Both the House and Senate bills would create categories of benefit packages that could be offered on the exchange. Under the Senate bill, there are four categories: bronze, silver, gold and platinum. Under the House version, there are three categories: basic, enhanced and premium. The bronze and basic plans would offer the lowest premiums and restricted benefits, while the platinum and premium plans would be more expensive but would cover more, as well as offer such extras as dental and vision coverage.

I’m young and rarely go to the doctor. What are my options if I don’t think I need a bronze or basic plan?

The Senate bill creates an additional category called a catastrophic plan, which would be available to people age 30 and younger. The plan would likely have lower monthly costs and would cover up to three visits to a primary-care doctor.


An Overview of the COBRA Extension

Secova Inc. released the following summary of the new law extending eligibility for the COBRA Premium Subsidy:

1. People who were laid off before December 31, 2009 are eligible for ARRA premium reduction for an additional two months (through February 28, 2010) if they elect COBRA.
2. The COBRA premium subsidy is available for an additional six months for a total of 15 months. Employees and employers should not confuse the COBRA premium subsidy with the length of COBRA coverage itself.
3. Retroactive payments are allowed for reinstatement in some cases. Those who failed to pay their COBRA premiums once their initial subsidy period expired can pay the premiums retroactively to maintain COBRA at subsidized rates for an additional six months (not to exceed 15 months).
4. The new law requires notices to the following people:
(a) People who are eligible for the subsidy extension or have experienced a qualifying event on or after October 31, 2009.
(b) People who are eligible to make premium payments retroactive because they let their COBRA coverage expire once their subsidy period ended.
(c) People who are entitled to a reimbursement or credit because they were eligible for additional assistance, but paid the full amount of the premium coverage.

The extension of the COBRA premium subsidy gives very little time to implement new administrative procedures and meet the new notice requirements. The Departments of Labor, Treasury, and Health and Human Services are continually releasing clarifications


MetLife Study Reveals Employers of All Sizes Closely Following Health Care Reform While Consumers’ Attention is Split along Generational Lines

NEW YORK–(BUSINESS WIRE)–Health care legislation continues to be a very hot topic among Americans today. According to new research from MetLife, 75% of individuals and 83% of employers report paying close attention to health care legislation developments. Regardless of company size or whether or not they currently offer medical benefits, eight-in-ten employers say they are on top of the legislation. However, interest is very different among generations as 83% of Baby Boomers and 74% of Generation Y individuals say they are closely following reform developments, compared to 63% of Generation X.

“We have seen a great appetite for information on health care reform”

.As for where they obtain information about health care reform legislation, consumers and businesses alike turn to traditional media outlets. More than eight-in-ten (85%) individuals and 56% of employers cite traditional media outlets (TV, radio, newspapers and magazines) as preferred sources. However, more than half (57%) of larger employers (500 or more employees) are also turning to their benefits brokers or consultants for information, more so than to business media (42%), general audience media (37%) or industry publications (32%).

“We have seen a great appetite for information on health care reform,” said Ronald Leopold, MD and vice president, U.S. Business, MetLife. “Our study also reveals a tremendous opportunity for insurance brokers and benefits consultants to help better educate their clients. In turn, well-informed employers will be better positioned to share with their employees the implications of health care reform on their personal situations.”

Current Satisfaction Impacts Attitudes Toward Health Care Reform

Not surprisingly, levels of satisfaction with current medical benefits impact Americans’ attitudes toward health care reform. More than six-in-ten (62%) Americans without any medical insurance feel that health care reform will be “good for America,” contrasted with 42% of those with medical insurance. 65% of Generation Y individuals believe that health care reform will impact them favorably, but only 44% are satisfied with their current medical insurance. On the other hand, while only 34% of Boomers believe that health care reform will have a positive impact on them personally, 63% also say they are satisfied with their current medical coverage.

Attitudes toward health care reform also correspond to health status. According to the MetLife study, 65% of consumers who assess their health as fair or poor say that health care reform will have a positive impact on them and their families, contrasted to 28% for those who say their health is very good or excellent.

Employers’ Next Steps

Three-quarters of employers strongly agree that employees consider health insurance a critical component of a compensation package. Virtually all (96%) also say promoting a culture of health and wellness for employees is important. However, many of today’s employers (41%) aren’t sure what they will do regarding medical benefits should legislation pass. Thirty percent of those that do offer medical coverage expect their health benefits to remain unchanged, while 39% of those employers who do not currently offer medical coverage are not anticipating offering that benefit.

While 36% of employers are unsure about what they will do regarding non-medical benefits like life insurance, disability income protection, and dental benefits should legislation pass, 44% of those that offer these benefits anticipate that they will make no changes to them. Only 5% of employers who offer these benefits say they would consider reducing them.

“Effective communications for diverse audiences is a critical component for the success of health care reform. While there is understandably a reason for a ‘wait and see’ approach by employers as the legislation is debated, communicating to employees that their current benefits are not changing in the short-term can be surprisingly reassuring,” continued Dr. Leopold.


Individual Premiums to Increase; No Rate Relief for Small Group Under Senate Bill

BestWire Services –

Dec. 1: A new analysis from the Congressional Budget Office demonstrates that most nonelderly people who would be insured under the current U.S. Senate health reform bill would pay about the same or less in premiums by 2016, if government subsidies for lower-income people are factored in.

The vast majority of the insured 70% would still be in large group plans, the report said. Premium changes among that group would range anywhere from zero change to 3% less, according to the findings of the nonpartisan congressional spending experts.

The insurance industry pointed out that the report demonstrates “the current health care reform proposal fails to bend the health care cost curve,” according to a response from America’s Health Insurance Plans. The industry association focused on those with nongroup policies, who would end up paying more in 2016 — “double-digit premium increases for millions of Americans.”

AHIP argued that the bill encourages people to delay purchasing coverage until they are sick, and the organization also said the CBO report ignored regional variations in premiums.

The next largest segment 17% would be the nongroup insured, where more than half would have their insurance costs subsidized by federal government help.

Those receiving subsidies would pay 56% to 59% less than they would if the system continues as it is now. But the remainder amounting to about 7% of the total nonelderly insured, or 13.8 million would pay from 10% to 13% more than they would without the bill.

The last segment is the small group, representing about 13% of the market.

Their premium difference would be close to zero — except for the 12% who would receive subsidies, bringing their costs down by as much as a tenth.

Besides the 7% potentially seeing significant premium increases, the other negatively affected group are those who currently receive higher-cost plans, also known as “Cadillac plans” in the ongoing health care debate in Congress.

Those premium plans held by about one in five people would be subject to a new excise tax to help pay for the overall health reforms. The report surmises that “most people would avoid the cost of the excise tax by enrolling in plans that had lower premiums.” But those plans would come with reduced coverage.