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.

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