Monday, November 30, 2009

CBO Confirms That Premiums Will Increase Under the Senate Healthcare Reform Bill

/PRNewswire/ -- The Blue Cross and Blue Shield Association (BCBSA) issued the following statement regarding the estimate released today by the Congressional Budget Office (CBO):

The CBO today confirmed what many economists, actuaries, and health policy experts have said for weeks: the Senate healthcare reform bill would make coverage more expensive for millions of people buying individual insurance policies.

While CBO recognizes the significant impact of the proposal, it understates the effect in three areas:

-- Several provisions in the Senate bill will cause many people to wait
until they are sick to purchase coverage, significantly driving up
premiums for everyone. These include severely restricting discounts
for young people, very low financial penalties for not purchasing
coverage, while still requiring insurers to guarantee coverage
regardless of preexisting conditions. Many young people, in
particular, are likely to pay the nominal fine, rather than purchase
coverage that costs far more than the penalty.
-- Adding the previously uninsured will significantly increase premiums
in the individual market. Contrary to CBO, Oliver Wyman, Inc.'s
analysis of actual claims' costs in the individual market predicts
that the uninsured will actually be 20 percent more expensive to
insure than those in the individual market today. Had CBO adopted a
similar assumption, their premium impact would have been approximately
30 percent higher.
-- The impact will vary significantly by state because of regional
differences in rating laws today. Oliver Wyman, Inc. found that
two-thirds of Americans live in states where the average premium
impact will be much higher than a national average.

Caution should be used in describing CBO's results on how many people will see lower premiums because of the federal subsidies. It should be noted that many of these people were previously uninsured and therefore did not pay any premiums. While we strongly support extending coverage to everyone and providing needed subsidies, we should be careful not to misconstrue these as savings.

We are pleased that the debate is now focusing on how the bills will make coverage less affordable to the American people. We encourage the Senate to use the CBO findings, as well as the analyses of Oliver Wyman, to make much needed improvements to the Senate Patient Protection and Affordable Care Act to ensure that it will be affordable and sustainable for everyone.

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