Health Insurance Reform Mythbuster: Health Insurance Reform Bill Will Result In Higher 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 new report from the independent Congressional Budget Office (CBO).
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 finds that a family at 425% 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% compared to current law:
Similarly, the Gruber analysis shows that an individual at 425% of poverty (whose income of $46,030 means that they would receive no affordability credits) would see their premiums reduced by $470 or 12%:
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% in premiums compared to current law and a family at 175% of poverty (income of $38,590) would save $9,050 or 84% 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.
In addition to the Gruber analysis of premiums under the Exchange, CBO has just released an estimate for the vast majority of Americans who will continue to get their health insurance in the employer-sponsored group market finding under the similar Senate bill, premiums would either be reduced or stay the same. For the millions in the employer-sponsored market, premiums would be reduced by up to 3% or stay the same. And for all Americans, co-pays 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 health reform. The CBO data indicates that the Senate bill would reduce premiums by 14 to 20% for people in the non-group market when comparing plans that provide equivalent coverage.