Posted on 01 Dec 2009
The Senate's health bill will keep insurance premiums roughly the same for most Americans and may raise them for some people who buy coverage on their own, according to a new analysis that came the day the Senate kicked off debate on the bill.
Democrats and the White House have described the bill as a powerful mechanism for lowering health costs, both for the government and for Americans who face sharply rising insurance premiums.
The analysis released Monday by the nonpartisan Congressional Budget Office (CBO) and the Joint Committee on Taxation painted a more complicated and uncertain picture. It said people who pay for their own insurance would see a higher bill, albeit for more generous benefits, unless they are lower earners who qualify for a new government tax credit.
Employees of small firms would effectively see their insurance premiums unchanged, while workers at large firms would see something between unchanged and slightly lower premiums under the bill, according to the analysis.
Democrats pointed to the areas of the report that predict lower premiums as evidence that the bill achieves its goal of lowering health-care costs for most Americans. Republicans argue that the legislation would impose big new costs on taxpayers, and seized on the analysis to drive home their criticism.
"A bill that's being sold as a way to reduce costs actually drives them up," said Senate Minority Leader Mitch McConnell (R - KY). "This is not what the American people are asking for. And it's certainly not reform."
According to the analysis, under current law some 14 million people are expected to buy health policies on their own by 2016. Average premiums would be roughly $5,800 for single policies and $15,200 for family policies under the legislation, compared with $5,500 for single policies and $13,100 for family policies under current law. The legislation is expected to more than double the number of people who would buy health policies on their own.
The bill ties the new tax credits to an insurance policy that has more generous coverage than many plans now offered to individuals -- one reason for the higher price. However, consumers would be able to buy a less-generous plan than the one tied to the subsidy.
More than half of people buying their own coverage would qualify for the new insurance tax credits, available to families of four earning up to $88,000 a year. Those credits would significantly lower their health-insurance costs, leaving them paying 56% to 59% less than if no bill was passed.
Employees of large firms, which account for 70% of the total insurance market, would see their premiums remain the same or decrease by as much as 3%, according to the report. Employees of small firms, which account for 13% of the insurance market, would see their premiums increase by up to 1% or decrease by up to 2%, the report found, except for a sliver of them that will get tax credits to offset that cost. The report concedes that the many variables leave a substantial degree of uncertainty in the findings.
The report found that more insurance plans would be subject to a new 40% excise tax -- meant to help pay for the bill -- on high-value insurance plans than Democrats have previously projected. According to the analysis, 19% of workers with employment-based coverage would be affected by the tax by 2016. Employers would likely scale back the plans to shield workers from the penalty.
As Senate floor debate began, Majority Leader Harry Reid (D - NV.) called for speedy consideration of the bill.
"The next few weeks will tell us a lot about whether senators are more committed to solving problems or creating them," he said. "We must avoid the temptation to drown in distractions and distortions."
Republicans voiced concerns about proposed cuts in Medicare payments to health-care providers. Sen. John McCain, the party's standard-bearer in the 2008 presidential campaign, proposed an amendment that would strip the cuts from the bill.
Debate on the legislation is expected to last through most of December and perhaps longer.
Republicans objected to efforts by Mr. Reid to restrict the amendments that can be offered during debate, including a proposal that would have ensured that no amendment could be offered that diverts dollars from the Social Security trust fund. Mr. Reid also proposed to require that all amendments be posted on the Internet before being debated on the floor, an idea Republicans objected to. The proposals eventually were dropped.
Democrats, in their first legislative overture, proposed a $1 billion amendment that would expand health services for women.
Offered by Sen. Barbara Mikulski, the proposal is designed to better ensure that women have access to preventive services and screening, and would eliminate a "major barrier" to care for women, the Maryland Democrat said.