Obamacare

CBO: Senate's Health Care Reform Bill Would Cause Individual-Market Insurance Premiums to Rise

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According to a report released by the Congressional Budget Office this morning, the average price of insurance premiums bought on the individual market—that is, premiums not purchased through employers—would go up by 10 to 13 percent in 2016 if Congress passed health care reform legislation now in the Senate. This tracks with state-level reform efforts, which have almost always coincided with spikes in individual insurance premiums.

Nevertheless, advocates of reform will—and indeed, already are—arguing that the report shows that the bill will make health care both better and more affordable. How's that?

While average insurance premium prices on the individual market would rise, new subsidies would more than cover the cost increases for the majority of people purchasing plans on the individual market. According to the CBO's estimate, 57 percent of those purchasing insurance on the individual market would receive subsidies. Those subsidies would vary by the individual's income level, but according to the estimate, on average, the subsidies would be enough to make the cost of insurance less than under current law.

Basically, the argument is that, sure, insurance on the individual market will be more expensive, but taxpayers will pick up the tab for the increased costs. This strikes me as a less-than-compelling defense of reform.

For one thing, it doesn't account for the fact that many people would be required to buy insurance that they wouldn't purchase otherwise. Even if the average premium price across the nation goes down for those getting subsidies, many individuals will be forced by the bill's mandate to buy insurance that they wouldn't have otherwise bought. For those people, the price of buying even subsidized insurance will be significantly higher than what they'd have chosen to do otherwise—not purchase insurance at all. And for many others, the price of buying even that subsidized insurance will be high enough that they'll choose to pay a fine in order to opt out instead. So, despite the subsidies, lots of people will pay quite a bit more than they do now, whether it's to get insurance that they otherwise would've chosen not to, or whether it's to avoid getting insurance at all.

Nor does this help those don't get subsidies. Nearly half—43 percent, according to the CBO—won't get any subsidies for their insurance. And for those people, double-digit percentage increases in insurance premiums (compared to what prices would be under current law) won't be affordable at all, especially for those who would've chosen not to purchase insurance otherwise.

Given the sky-high overall cost of the bill, and the recent report by the Center for Medicare and Medicaid Services confirming that the legislation won't reduce overall medical spending, this doesn't exactly strike me as a model of affordability.

I've got a longish feature on the CBO in the new issue of the print edition; you can read my past posts on the CBO's health care reports here, here, and here.

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76 responses to “CBO: Senate's Health Care Reform Bill Would Cause Individual-Market Insurance Premiums to Rise

  1. Ever write anything interesting?

  2. Better question: Ever write anything that doesn’t make me want to see the world drown in righteous hellfire?

  3. Nevertheless, advocates of reform will?and indeed, already are?arguing that the report shows that the bill will make health care both better and more affordable. How’s that?

    In Obama-math, up is down and irrational numbers are suddenly rational. That’s beauty of reality by legislature – you just say it, and it is so!

  4. Basically, the argument is that, sure, insurance on the individual market will be more expensive, but taxpayers will pick up the tab for the increased costs. This strikes me as a less-than-compelling defense of reform.

    It’s instead a more compeling argument for revolt.

    1. When you’re prepared to lead one, you get to use the word revolt.

  5. I used the, “It’s Obama Math!!” response to counter a fairly egregious mathematical error I made. It didn’t work. It did get a few laughs, and some awesome scornful looks.

    1. Yo should change your friends.

      1. Who said they were my friends. My friends know me well enough to expect such comments, hell I’ve caught them tip toeing around the Obama lov-a-thon when I come in the room.

        Sometimes being big, scary, having a large mouth, and no inhibitions pays off. Not often, but sometimes.

        1. You’ll get to say “I told you so” as they stand in the soup line.

        2. Sometimes being big, scary, having a large mouth, and no inhibitions pays off.

          Either pair of those attributes would serve one well in prison, that’s for sure.

    2. Didn’t we use to make fun of Bush for having the math skills of a child? Why isn’t SNL or John Stewart mocking Obama/Congress’s inability to use basic math?

      1. SNL has been doing a solid job, to the point that CNN and MSNBC make sure to run a “fact check” segment on any SNL skits. Jon Stewart is quickly becoming irrelevant, since he refuses to take the Obama cock out of his ass.

  6. Even if the average premium price across the nation goes down for those getting subsidies, many individuals will be forced by the bill’s mandate to buy insurance that they wouldn’t have otherwise bought.

    Which means that their health insurance cost will go up by 100%. This mandate is looking more and more like the protection rackets of the Chicago mobsters, where you had to buy their services so others could be covered. The only difference is that with Obamacare, you will (probably) not be knee-capped… but who can say for sure???

    1. 100% of zero is still zero.

  7. It’s the same “we have to do SOMETHING, even if we regret it later” mindset that got the US into Iraq and countless victims into bed with fat chicks.

    Going home alone might be shameful that night but, just like government programs, the shame of waking up next to a fat chick might never go away.

    1. Let’s atleast hope that it’s a fat chick with a pretty face and doesn’t use her teeth

      1. At some point you’re better off handling it yourself.

        1. You’re always better off handling it yourself. If you weren’t, Mother Nature wouldn’t have to shut down your logic functions when it comes to sex.

  8. “Even if the average premium price across the nation goes down for those getting subsidies, many individuals will be forced by the bill’s mandate to buy insurance that they wouldn’t have otherwise bought.”

    Not if they’re well armed.

    1. Well armed fat chicks?


  9. CBO: Senate’s Health Care Reform Bill Would Cause Individual-Market Insurance Premiums to Rise

    Hey, they can always sign-up for the public option instead. No pre-existing conditions, etc.

  10. Tyler, now that was funny, that is an anology even a congressman could understand….I will take it a step further….its going to be like waking up and realizing you and the fat chicks have matching wedding rings in a no devorce country

    1. And you’re being charged with sodomy

  11. Basically, the argument is that, sure, insurance on the individual market will be more expensive, but taxpayers will pick up the tab for the increased costs.

    The scary thing is, there are people who will happily say, “Well, that makes it okay.”
    Because money the government spends is free, apparently.

    1. Everyone knows that the money the government spends is not free. It’s paid for by those making over $250k per year.

      Poor lil rich girl ;

      1. That’s why it’s incredibly important not to make more than $249k per year.

  12. “Nor does this help those don’t get subsidies. Nearly half?43 percent, according to the CBO?won’t get any subsidies for their insurance”

    Not to mention the fact that their taxes will undoubtedly go up to pay for the ones who DO get subsidies.

    Becaause if they don’t qualify for subsides, that means they are “the rich” who are only qualfied for eternal milking by the federal government.

    1. hey…they got milk 2 spare.

      1. That doesn’t mean you’re entitled to any of it.

  13. advocates of reform will?and indeed, already are?arguing that the report shows that the bill will make health care both better and more affordable

    I’ll take this opportunity to suggest again my “solution” to this kind of claim by pols.

    Agree to a simple objective measure and reasonable timeframe. If your claim does not materialize, you resign and do not work in the public sector again.

  14. Isn’t making private insurance more expensive a feature rather than a bug from some people’s point of view?

    1. Exactly. They get this passed, health-care costs continue to skyrocket. Insurance companies flounder around and are tarred and feathered for record profits and then voila: Public Option.

      We’ll all get funneled into rationed care. The mega rich will buy health-care in Barbados. Everybody wins except those who actually need health care in the United States.

      1. “…those who need health care…”

        Doesn’t everyone need health care?

  15. How is it that an indirect cost (the taxes paid to cover the subsidies) lowers the total cost?

    And yes, RHSwan, your are correct that the real purpose of this entire exercise is to kill private insurance so we can have single-payer.

    1. The best that can happen is killing private insurance for non-catastrophic health matters. This is EXACTLY what raised costs beyond recognition.

      Given a choice between private insurance or a single-payer…I’d rather have the single-payer. However, the single-payer will not address the rising costs.

      Having neither the public option and private insurance (which is really what we have today anyway since insurance drops you when you need it most) is the TRUE solution to rising costs.

      If each individual pays for their own care, the cost will drop. The laws of dimishing returns will kick in. I just don’t know if the American Healthcare providers are ready for such a pay cut.

      The RIGHT thing to do is to do what the rest of the world does.

      1. Re: Alice,

        Given a choice between private insurance or a single-payer…I’d rather have the single-payer.

        Given the choice between private insurance companies and a system managed by lazy, accountable-to-none, unionized bureaucrats, I will take my chances with the private insurance companies.

  16. The current insurance regulations came to be because private insurance was basically swindling policy holders that got sick. Since so few do, it’s not noticible to the whole.

    1. Re: Alice,

      How were the insurance companies swindling policy holders? The policies are contracts, and as long as the company or the client stick to what the contract says, there cannot be a valid accusation of fraud.

      It is one thing to say the terms are not acceptable, which in that case a person is free to seek an alternative, competing offering. But to say that companies systematically swindle their customers is inaccurate.

      1. Once u r sick and no one will insure u it’s 2 late.

        It’s not like homeowners insurance.

        In this circumstance, u die.

        I’m a big fan of the free market. Just not for health insurance. I can’t think of anything else.

      2. The problem is that so few people acually purchase their own insurance, their emplyoers do. And their employers don’t care if the fine print says “If you lose your job while sick we can stop covering you.”

  17. Yes, health insurance in the individual market will become more expensive…because (Heaven Forbid!) insurance companies will actually have to cover sick people. Whoda thunk?

    It amazes me how libertarians just refuse to accept that the individual health insurance market will never, ever function properly.

    1. Re: Chad,

      It amazes me how libertarians just refuse to accept that the individual health insurance market will never, ever function properly.

      It’s interesting you would make such an assertion when individual insurance for almost everything else seems to work pretty well, including auto repair insurance which, by the way, does not cover pre-existing conditions either but, unlike health insurance, suffers no artificially-imposed mandates and requirements by each state, making it dirt cheap.

      1. Insurance for “other things” does not suffer the same market failures, or suffers them to a much smaller degree.

        Insuring against low-probability, well-defined, one-off events is not a problem for markets. Insuring against conditions that are chronic and where causality is difficult to ascertain present major challenges. The market has no answer to the “pre-existing condition” issue.

        1. Of course it does. You can be responsible and buy insurance before you get sick. Or you can wait until you’re already sick and whine about the injustice of the giant insurance companies failing to subsidize your own poor decisions.

          It works in every other area of insurance too. Nobody would say home insurance companies should be forced to sell insurance to people whose houses are already on fire, or that auto insurance companies should be forced to cover cars that have already crashed. Health insurance is no different.

          1. I respectfully disagree.

            Insurance does NOT come through for people that are insured.

            It’s an OK and funny game when it comes to other insurance but not for healthcare.

            There’s absolutely no reason why we can’t pitch in to take care of each others sick children, wifes, mother, etc.

            It’s just a mean-spirited attitude only shared by the health.

            And by the way, the market has no place in this.

            Perhaps a solution should be is a voluntary public plan where u people can choose to have nothing to do with.

            1. Perhaps a solution should be is a voluntary public plan where u people can choose to have nothing to do with.

              What’s stopping you? If you don’t desire other people’s tax dollars, what do you need the government for? Go start your own health-charity-co-op on your own.

          2. So once you get sick, how do you deal with the two following problems:

            1: You can never switch insurance companies, because you have a pre-existing condition. Your current company knows this, and can screw you mightily.

            2: Your current insurance company will be looking for any excuse whatsoever to drop your coverage.

            And what do we do with those who didn’t buy in advance, or lose their coverage for whatever reason? Shoot them if they approach a hospital?

            1. These problems exist because of the employer-based system.

              In a system when individuals purchase their insurance directly, companies that don’t actually cover you when you get sick will fail to find customers, and patients will seek solutions to the issue of long-term conditions, such as sticking with the same insurer (which they woudl be able to), or buyign a policy that pays for long-term care, or pays out a lump sum, or any other thing that some creative agent in an insurance company might invent.

              1. Really, Hazel.

                There are plenty of individual plans in, say, New York. Provide any concrete evidence about which one screws sick people more. Good luck.

                The “market” can decide between vanilla and chocolate because people as individuals will try both many times and suffer only a trivial penalty for getting it wrong. You will really only test your insurer a few times in your life (routine stuff doesn’t count) at most. Word-of-mouth anecdotes are less than useless, internet reviews even more so, and even the best for-pay reviews only a bit better.

                In any case, that is irrelevant. A “nice” insurer cannot exist due to adverse selection. It will immediately attract all the sickest people, driving up its costs and thereby driving away its healthy people, further raisings its cost. It is a positive-feedback death spiral that rapidly pushes all insurers to race to the bottom.

                Your lump-sum plan is utterly unworkable and absurdly incomprehensible. It might work if everyone was an actuary and there were no lawyers. Your odd belief that decisions worth hundreds of thousands of dollars wouldn’t involve both fraud and lawyers astounds me.

                1. You are immensely stupid and ill-informed Chad.

                  New York has regulations that require insurers to charge everyone exactly the same premiums. Under such a requirement, OF COURSE insurers are going to select against the highest risk people. DUH.

                  If you remove those regulations, insurers will charge high-risk people more, and still be able to make a profit insuring them. problem solved.

                  Word of mouth is not “less-than-useless”. It has huge measurable effects on (for example) movie box-office returns. So do reviews, and all that occurs in a much shorter time frame (weeks), than the time-scale for health insurance plans. When people shop around for health insurance plans, they ask their friends and family. Of coruse they do, BECAUSE they know that they aren’t going to be personally trying out several plans.

                  Just because you are too dumb to understand how the free market functions, doesn’t mean it won’t function for you too Chad. Most morons are able to aquire food from the grocery store without having an IQ over 80, so you shouldn’t have any problem obtaining adequate health insurance, whether you understand how it works or not.

            2. “And what do we do with those who didn’t buy in advance, or lose their coverage for whatever reason? Shoot them if they approach a hospital?”

              Umm, charity?

              http://www.shrinershq.org/About/

              1. Er no, actually we just bill them and they have some large debts to pay off.

            3. Chad, you are absolutely right.

              People can’t see beyond a certain point. Specifically, once you are sick.

              All these people talk about is what the system would have been without gov regulations.

              The government didn’t make regulations for nothing. Many people ended up not being covered and had no assets to seize. Even when assets were seized, they still ended up on the public dole. WE (the tax payer) END UP PAYING FOR IT ANYWAY.

              Insurance has been allowed to get a free ride. Self-insured companies also get a free ride…They simply dump their employee once they can’t work anymore.

              Self-insured companies get to enjoy a relatively young/healthy workforce. The most they pay for is maternity…and the occasional sick spouse/kid.

              1. People are more stingy with their healthcare expenses when they are paying for it themselves. Yes, some people end up in bankruptcy because of a major illness. Not all of them though. The threat of bankruptcy or debt burdens at least provides a strong incentive to minimize expenses and use less costly treatments.

                The current system puts a far greater burden at taxpayer expense, since it removes any incentive to restrain spending from both the patient and doctor. Cost-escalation then causes people who otherwise would be able to afford their treatment out of pocket to find it unaffordable, and more people get pushed into bankruptcy and public dependency. Insurance rates spiral upwards to the point where it now barely worth it to have insurance since the premiums are much greater than your typical annual health care expenses.

                Mandatory insurance will not solve this problem.

                1. Hazel, I suggest you look at the Japanese system. They generally have a 30% co-pay up to a generous out-of-pocket maximum. This is sufficient to control costs, without the absurd and cruel system we have of leaving tens of millions un-insured and bankrupting people left and right. There is nothing wrong with including such elements in a single-payer system. You make it sound as if they are incompatible.

            4. First of all, you have a contract with your insurance provider (if you want one). They can’t jack up the prices or drop you once you get sick if those actions aren’t allowed under the terms of the contract.

              And secondly, like Hazel pointed out, any company that would behave that way wouldn’t stay in business very long in a free market system anyway.

              As for the people who chose not to buy insurance in advance and then get sick, they can either pay out of pocket, they can rely on voluntary private insurance, or they’re out of luck. The same thing would happen to someone who didn’t buy homeowner’s insurance until after his house caught fire, or someone who didn’t buy an umbrella before it started to rain, or a winter coat before it starts to snow. What’s so special about health insurance anyway? Food and clothing are more necessary for survival, but we get by just fine without government mandates to buy food or clothing insurance, let alone government run grocery and clothing stores.

              1. They can find excuses to drop you. One tried to drop me once when I didn’t pay a bill that I never received. I was lucky enough to log in to my account one day before the drop-dead deadline and notice the problem. They did actually drop my coverage but re-instated it because I got it post-marked on time. I hear similar stories all the time, and they only get worse as you get sicker.

                And heaven forbid that a really sick person might miss paying a bill at some point, either intentionally or unintentionally. Should these people be screwed until they are 65 (and then only saved due to the evil government)?

              2. And what exactly is one to do when the insurance company doesn’t make good on their contract?

                All of the insurance behave the same way. It’s called an Oligopoly. There is no alternative.

              1. As i mentioned earlier, that would DEFINITELY lower cost and STUN the GROWTH of medical advancement.

                1. If by “stun” you mean “spur”, then yes.

    2. Chad can’t tell the difference between covering people who get sick AFTER they buy insurance, and those who get sick BEFORE they buy insurance.

      Chad is a fucking retard.

      1. And this is where the thread should have ended.

      2. I don’t think anyone should be buying insurance, Hazel, because people shouldn’t be screwed for life if they get sick while uninsured, or lose their insurance after getting sick for some reason.

        1. Oh the horrors of getting a life-threatening disease, and LIVING. The BILLS you have to pay, man, the BILLS!

          It’s almost as if it would have been better to die, then to to have to pay off the equivalent of a home mortgage.

          Surely nobody should have to suffer the terror of bill-paying, in preference to an early death.

  18. Not with the public option they wouldn’t! See the facts. http://cli.gs/z3AtaY/

  19. What people don’t realize is that the PUBLIC OPTION has been in existance for YEARS. It’s called bankruptcy and medicaid.

    We the tax payer pick up the bill. We the patient and the insured pay the higher premiums for those who default. Them, the insurance company enjoy their so-called 3% profit and their non-transparent 25-35% admin fee.

    1. I’m sure the government admin fee will be both transparent and lower than existing fees + profits.

      Of course if it turns out that it’s not, by then it’ll be too fucking late to do anything about it.

      Or maybe the problem is that I haven’t taken ObamaMath yet.

  20. Somehow lost in all of this is the fundamental that insurance is a risk pool. Intended primarily to cover the unusual. Personally thus, I’d just have a high deductable, and base the premium accordingly.
    However if the intention is to cover all, and if insurance companies have to do that regardless of pre existing conditions, premiums will increase. On the other hand many uninsured are young healthy, and that will drive premiums down. Actuaries should know the answer.
    In any even we cant have it both ways. if we want universal coverage those odds have to be the basis.
    The government’s function is setting and enforcing rules like this, and subsidy through existing social programs where essential. The government has no function in the delivery process.

  21. Although taxpayers do pay for state and local government spending, taxpayers do not pay for federal spending. Further, future taxpayers will not pay for deficits, just as today’s taxpayers do not pay for yesterday’s deficits (nor for today’s spending).

    The government spends by crediting the bank accounts of vendors, and debiting its own balance sheets. No amount of tax receipts affects this process. The tax payments disappear.

    When taxes are received, the payer’s bank account is debited and the government’s balance sheets are credited. There is no fund or vault where money is stored for future use. The government creates spending money ad hoc.

    Unlike the case with you, me, state and local governments and corporations, today’s spending does not affect the federal government’s ability to spend in the future. The federal government’s uniqueness in this regard, is not fully appreciated by the media, politicians and even (shamefully) some economists.

    Finally, the government never needs to borrow, which it does by creating T-securities out of thin air, then selling them. It just as easily and prudently could create money directly, also out of thin air. No difference, except it would eliminate the misunderstood “debt.” Borrowing is a relic of the gold standard days; it can and should be eliminated.

    Rodger Malcolm Mitchell

  22. VOTE THE BUMS OUT!

  23. Guess what, premiums went up over 30%, in absence of any government plan. I have the forms right here, $693 to $938, with no actual reason. We don’t use it! This is with a $2500 deductible per person $10,000 per family, not any “caddilac!. This sucks.

  24. Forget about who’s paying the subsidies. Most will drop out of the individual system because they are promised coverage when they need it. Paying the fine is a lot cheaper than buying insurance. instaed of insuring more americans we will have fewer.

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