Health Insurance Premiums to Rise with Health Reform

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According to a Congressional Budget Office report, health insurance premiums would increase by as much as 13 percent for about 14 million Americans under the current US Senate health reform proposal. The Senate has claimed that its proposal would make health care more affordable.

The finding of higher health insurance premiums is in a report prepared by the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT), which was done at the request of Senator Evan Bayh and many other senators. The senators had asked for the analysis to determine how health insurance premiums might be affected by enactment of the Patient Protection and Affordable Care Act, which was proposed by Senator Harry Reid on November 18, 2009.

According to the report, the higher insurance premiums would be paid by the 14 million Americans who need to buy their own health insurance policies and who make too much to qualify for proposed subsidies. Subsidies would reduce costs for an additional 18 million people. The report also notes that the 134 million people who are covered by a large employer may see their premiums stay the same or decrease by up to 3 percent.

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The Senate’s proposed health reform measure would impose a penalty of $750 per adult and $375 per child for people who refuse to purchase health insurance under the mandate. These penalties would take effect in 2016.

The proposed legislation would also impose several new fees on providers of health insurance and on manufacturers and importers of medical devices and brand-name prescription drugs. The CBO and JCT report estimates that these “would not result in measurably higher premiums for private coverage.” The legislation would also reduce payments to hospitals and certain other Medicare providers, and significantly increase enrollment in Medicaid. These measures could cause health insurance premiums for private coverage to increase.

The findings of the CBO and JCT report, and especially the estimated higher health insurance premiums, will likely be taken up by Republicans as a tool to help block the proposed health reform measure. Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, commented on the report, saying that “the vast majority of Americans will see lower premiums than they would if we don’t pass health reform.”

SOURCES:
Bloomberg, Nov. 30, 2009
Congressional Budget Office/Joint Committee on Taxation report

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