CBO predicts help for middle class

Readers of my articles on healthcare reform in Z, In These Times, Dollars and Sense and Workinginthesetimes.com will recall me stressing continually that the Democratic reform bills set up unaffordable premiums and levels of coverage for middle-income families.


I have argued that this is especially true of the Senate Finance bill drafted by Chairman Max Baucus and former Wellpoint lobbyist Liz Fowler. I referred to various sources, in particular a Sept. 21 chart in the Washington Post. I attacked the Democratic plans as imposing a heavy burden via the individual mandate to buy insurance on ordinary Amerians, while providing insurers with at least 30 million new customers. Following the lead of former Cigna executive turned whistle-blower Wendell Potter, I have predicted the likelihood of a great public backlash against the Democrats.


However, this week the Congressional Budget Office has issued a report that claims that the Senate Finance plan will offer better coverage at a lower price for 57% of Americans. So check out  this summary by the progressive Jonthan Cohn, author of the book Sck on the condition of the US healthcare system:


If you get insurance through a large employer, then your insurance premiums should stay roughly the same, with perhaps a very small decrease. Specifically, CBO predicts the effect will be somewhere between no change and a 3 percent reduction. So if you’re a family that would have paid $20,300 for insurance in 2016, CBO would expect you to pay around $20,100 instead.

If you get insurance through a small employer, then, again, your insurance premiums should stay roughly the same, with perhaps an even smaller decrease. Here the range is a 1 percent increase and a 2 percent reduction. Instead of paying $19,300 in annual premiums, as the projections now suggest you’d owe in 2016, you’d probably pay $19,200.

If you get insurance on your own, then your premiums would probably go up, because you’d end up buying coverage that is more comprehensive. (Remember, the individual market typically offers far skimpier benefits than what’s available through employers.) Overall, premiums for this part of the market would be expected to go up from $13,100 to $15,200. But–and this is the key point–newly available federal subsidies will more than offset this increase. In other words, the majority of people buying coverage on their own will be able to spend less money and, at the same time, get better insurance. So if you’re a family buying coverage on your own, without an employer, and you qualify for federal subsidies, then you would be expected to pay less than $13,100 a year for health insurance–maybe a lot less if you were making, say, $30,000 a year and thus eligible for pretty generous subsidies.

These projections represent averages. The CBO expects considerable variation in each group, so that some people pay more and some people pay less. And, like all CBO projections, these are subject to both enormous uncertainty and CBO’s particular set of assumptions.

But that last part is actually encouraging, because CBO tends to have very conservative (small "c") assumptions about the ability of government reforms to save money in the health care system. If measures like greater use of information technology and comparative effectiveness data are more successful than the CBO projects–and many experts believe they will be–premiums should come down even more.


Also, MIT health expert Jonathan Gruber concluded:

The Senate Finance Committee proposal includes health insurance and delivery system reforms, new options, premium assistance, and other proposals to improve quality, affordable health care for all Americans through state-based exchanges.  The premiums that individuals will face in these exchanges are, according to the non-partisan Congressional Budget Office, considerably lower than what they would face in the existing non-group insurance market, due to the market reforms put in place by the SFC plan and the market economies of new exchanges.  …

for those facing purchase in the non-group market, the SFC bill will deliver savings ranging from several hundred dollars for the youngest consumers to over $8500 for families.  This is in addition to all the other benefits that this legislation will deliver to those consumers–in particular the guarantee, unavailable in most states, that prices would not be raised or the policy revoked if they became ill.

The full memo, complete with slides, is here.

These offer a considerably more optimistic picture than the one I have repeatedly drawn, and I hope actually they turn out to be true because the Dems’ major bills have been such pathetic disappointments in most key respects. I will be checking this question out further and reporting back to my readers.


However, let’s keep the following points in mind to give us perspective on the CBO report ang Gruber analysis, assuming that its rosy projections are correct:

  1. Both the Senate and House leave in place the directing role of the health insurance industry, which both inserts itself between doctor and patient and consumes at least $400 billion a year in excess aministrrative costs.
  2. The Senate Finance bill at this point contains no effective language to ensure that employers offer coverage to their workers.
  3. The Senate Democrats are still weighing language to tax "Cadillac" plans that would actually have little impact on the weathy, but would hammer working people living in high health-cost areas. " Two-thirds of employers would raise deductibles, change insurers or scale back coverage to avoid the so-called Cadillac tax on high-cost benefits proposed in the Senate Democrats’ health care bill, a survey to be released Thursday by consulting firm Mercer says.." according to Kaiser Health News.
  4. The Democratic bills retain the fundamental motive of for-profit insurers to maximize profits by minimizing care, clearly setting up a never-ending conflict that insurers have the power to win in the vast majority of cases that never reach public attention.  The insurers, for example, will still be able to charge older and sicker patients twice as much as younger, healthier people.
  5. There is no realistic mechanism for holding down costs. The most likely outcome: as costs rise, subsidies to the poor and middle-class will be sharply reduced. Without effective cost controls, universal healthcare will never happen.
  6. The public option based on all Americans being eligible to join a Medicare-style plan, , which the most optimistic of progressive had seen as a possible bridge toward a single-payer system, has been uttlerly gutted. Still, it serves as a very weak pretext for the likes of Joe Lieberman to oppose reform.


Overall, the reform proposals are badly distorted by the priorities of for-profit insurers and Big Pharma, backed up by campaign money and legions of lobbyists.


Even if I have been wrong on the costs to average citizens based on the figures that were available to me, I don’t think that the Democrats will succeed in 2010 in using healthcare reform–if it gets passed –to reaffirm the notion that government, with the Dems in power, is now fighting for the interests of ordinary working people.


Fundamental, single-payer reform was ruled "off the table":early on despite 67% support among Americans (5/16/05 report in Business Week) and 59% among doctors (Journal of Internal Medicine, 2009). Too many shameful deals have become public along the way.And the jobless recovery persists, while Obama’s economic advisors remain silent on the off-shoring of jobs and spreading misery.

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