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Health Insurance Reform Mythbuster - 'Health Reform And Insurance Premiums'

Opponents of health insurance reform continue to spread myths about the recently-passed Affordable Health Care for America Act.  For example, they are claiming that health reform would increase premiums for most of America's families.  But the facts continue to knock these myths down--including a brand-new report from the independent Congressional Budget Office.

MYTH:   The House health insurance reform bill would result in higher premiums.  

FACT:  An analysis of the House bill by noted MIT health care economist Jonathan Gruber concludes that the bill would result in lower premiums than under current law for the millions of Americans using the newly-established Health Insurance Exchange - including those who are not receiving affordability credits to help them purchase coverage.   (The Health Insurance Exchange is for those without access to affordable employer-sponsored coverage.)  As Gruber states: “the premiums that individuals will face in the new exchanges established by this legislation are … considerably lower than what they would face in the non-group insurance market [under current law], due to the market reforms put in place by the House plan, the mandate on individuals to participate regardless of health, and the market economies of new exchanges.”

  • The Gruber analysis shows that, on the Exchange, a family at 425 percent of poverty (whose income of $93,710 means that they would receive no affordability credits) would see their premiums reduced by $1,260 or 12 percent compared to current law.  Similarly, the Gruber analysis shows that, on the Exchange, an individual at 425 percent of poverty (whose income of $46,030 means that they would receive no affordability credits) would see their premiums reduced by $470 or 12 percent. 
  • The annual savings are much larger for lower income populations that receive affordability credits.  Under the House bill, when the bill's affordability credits are taken into account, a family at 275% of poverty (income of $60,640) would save $5,030, or 47 percent in premiums compared to current law and a family at 175 percent of poverty (income of $38,590) would save $9,050 or 84 percent in premiums compared to current law.
  • Gruber also points out that, even as individuals and families on the Exchange are paying less, they will be getting more:
  • The coverage those on the Exchange get under the House plan would be better than today's typical coverage in the non-group market.
  • For example, it would protect individuals and families from high out-of-pocket costs.
  • That's in addition to other consumer protections in the bill - like ending discrimination based on pre-existing conditions and guaranteeing that your coverage won't be dropped or watered down when you get sick or need it most.

New CBO Analysis

  • Furthermore, for the vast majority of Americans who get their health insurance in the employer-sponsored group market, the Congressional Budget Office has just released an estimate that, under the quite similar Senate bill, premiums would either be reduced or stay the same.  Specifically, for the millions in the employer-sponsored large group market, premiums would be reduced by up to 3 percent or stay the same.  And for all Americans, copays would be eliminated for preventive care and out-of-pocket expenses would be capped.
  • Like Gruber, CBO found that for Americans using the non-group market, their coverage would significantly improve under the Senate bill.  The CBO data indicate that the Senate bill would reduce premiums by 14 to 20 percent for people in the non-group market when comparing plans that provide equivalent coverage.

For the Gruber analysis, please click here.

For the CBO analysis, please click here.