The Congressional Budget Office released a study about how Harry Reid’s Senate bill will affect insurance costs and found that premiums in the individual market will rise by 10% to 13% more than if Congress did nothing. If left alone, family policies are projected to cost $13,100 on average. Under ObamaCare it will jump to $15,200.
Playing along with Reid and his ilk, the New York Times told its readers there is “No Big Cost Rise in U.S. Premiums Is Seen in Study” and the Washington Post tried to prop it up by saying, “Senate Health Bill Gets a Boost”. Obama’s White House put their unique spin on it by stating the CBO report was “more good news about what reform will mean for families struggling to keep up with skyrocketing premiums under the broken status quo.”
From the Senate floor Finance Chairman Max Baucus said,
“Health-care reform is fundamentally about lowering health-care costs. Lowering costs is what health-care reform is designed to do, lowering costs; and it will achieve this objective.”
Well, Not Quite
What Baucus and the White House left out some very important points about the report. What they don’t want you to know is that the CBO says it expects employer-sponsored insurance costs to remain roughly as they are now. Costs will not be going down. Not only that, the whole purpose of Reid’s reform bill was to fix the individual market which is expensive and unstable due mostly to the fact it does not receive favorable tax treatment which are given to job-based coverage.
The CBO’s report is confirming that new coverage mandates actually drive premiums higher. Democrats are claiming that these higher insurance prices will be offset by new government subsidies. How do they do that? Government subsidies come from you and me through taxes, that’s how.
About 57% of the people who buy insurance through the bill’s new “exchanges” that will supplant today’s individual market will qualify for subsidies that cover about two-thirds of the total premium, whose cost will be offset by subsidies.
For you thinkers out there, yes, you got it, the bill will increase costs but it will then disguise those costs by transferring them to taxpayers from individuals. Higher costs can be made to fade away because on the government balance sheet. The Reid bill’s $371.9 billion in new health taxes are also apparently not a new cost because they can be passed along to consumers, or perhaps will be hidden in lost wages.
What’s that called?
This is the paleo-liberal school of brute-force wealth redistribution, and a very long way from the repeated White House claims that reform is all about “bending the cost curve.” The only thing being bent here is the truth.
The CBO is almost certainly underestimating the cost increases. Based on its county-by-county actuarial data, the insurer WellPoint has calculated that Mr. Baucus’s bill would cause some premiums to triple in the individual market. The Blue Cross Blue Shield Association came to similar conclusions.
Prices for the individual market are regulated community rating. With it, insurers charge nearly uniform rates regardless of customer health status or habits. The CBO doesn’t think this will have much of an effect, but costs inevitably rise when insurers aren’t allowed to price based on risk. This is why today some 35 states impose no limits on premium variation and six allow wide differences among consumers.
Amanda Kowalski of MIT, William Congdon of the Brookings Institution and Mark Showalter of Brigham Young have found similar results. In a 2008 paper in the peer-reviewed Forum for Health Economics and Policy, these economists found that state community rating laws raise premiums in the individual market by 20.9% to 33.1% for families and 10.2% to 17.1% for singles. In New Jersey, which also requires insurers to accept all comers (so-called guaranteed issue), premiums increased by as much as 227%.
The Real Crime
The crime is there are plenty of reform alternatives that really would reduce insurance costs. According to CBO, the relatively modest House GOP bill would actually reduce premiums by 5% to 8% in the individual market in 2016, and by 7% to 10% for small businesses. The GOP reforms would also do so without imposing huge new taxes.
Once again, the CBO comes in with the unbiased truth, independently backed up by brains at MIT, the Brookings Institution and Brigham Young. And once again, Reid and his Democrat Party spin and distort the facts to doctor up this pig while hoping we won’t notice.
The Democrats tell us it’s all about “lowering costs.” The truth is it doesn’t. It raises them. Clearly, Obama, Reid and Nancy don’t care. They’re really only interested in creating yet another government run program. Time after time, history shows it amounts to being an incredible waste of money.