CBO: Nongroup premiums will rise under health care bill

As the Senate begins debate Monday on Democrats' healthcare overhaul legislation, CBO released a report showing nongroup market premiums will be higher under the bill than current law without taking federal subsidies into account.

The CBO report on premiums could prove problematic for Majority Leader Harry Reid, D-Nev., as he tries to round up 60 votes to reach final passage this month. Moderate senators have expressed concern with supporting anything that could raise premiums.

Sen. Evan Bayh, D-Ind., requested the CBO analysis, but his office did not comment on the report in time for publication.

CBO predicted the measure would increase average nongroup premiums 10 percent to 13 percent by 2016 above what premiums would be if current law remained in place. The change represents an average premium of $5,800 for individual policies and $15,200 for family policies under the proposal.

The increase becomes a 56 percent to 59 percent decrease for the 57 percent of purchasers in the nongroup market that will receive federal subsidies, which totals about 18 million subsidized enrollees. That leaves 14 million coverage purchasers who will pay the higher premiums.

The CBO report said the average premium will be higher, subsidies aside, because the bill will require insurers to cover a "substantially larger share of enrollees' cost for health care (on average) and a slightly wider range of benefits."

Senate Democratic staff said that because the plans will be required to be more comprehensive, enrollees will actually save 14 percent to 20 percent on their premiums if they purchased the same coverage they have today.

Scorekeepers also determined a 40 percent tax on high-cost "Cadillac" plans will affect 19 percent of employer-based policies by 2016. This revelation could cause heartburn for some members who are concerned the tax would hit middle-income workers.

But the bill's effect on employer-based health coverage is negligible, CBO found, coming in at a potential 1 percent average premium increase to a 2 percent decrease for those in the small group market, and no change to a 3 percent decrease for those in the large group market. The large group market, which consists of those employed by companies with more than 50 employees, covers by far the most people with 134 million enrollees.

Twelve percent of the 25 million in the small-group market, which consists of those employed by businesses with fewer than 50 employees, would receive small business tax credits that would decrease their average premium 8 percent to 11 percent.

The report comes as Democrats and Republicans are set on Monday to each offer an amendment on the healthcare legislation.

Sen. Tom Coburn, R-Okla., has already submitted two amendments. One would require members of Congress to enroll in the public option unless their state opts out of the plan. The second would require bills, resolutions and conference reports be posted online along with CBO scores 72 hours before a vote on final passage.