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CBO Confirms That Premiums Will Increase Under the Senate Healthcare Reform Bill
Date:11/30/2009

While recognizing significant impact, CBO analysis understates the effect

WASHINGTON, Nov. 30 /PRNewswire-USNewswire/ -- 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.

The Blue Cross and Blue Shield Association is a national federation of 39 independent, community-based and locally operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for more than 100 million members - one-in-three Americans. For more information on the Blue Cross and Blue Shield Association and its member companies, please visit www.BCBS.com.

SOURCE Blue Cross and Blue Shield Association


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SOURCE Blue Cross and Blue Shield Association
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