A Premium on Accurate Information
02:35 PM EST
As our year long debate on health care comes to a close there’s a lot of misinformation flying around. Case in point: a recent headline suggesting that health premiums would increase under the President’s health care plan. The suggestion of this article was that maybe Americans would be better off and end up paying less if we ditch reform just continue to do nothing.
In fact, the opposite is true. Most people would pay less—in many cases a lot less. Let’s look at why:
In the absence of reform, health premiums are expected to continue skyrocketing. Those 20, 30 and 40% increases that you’ve heard about lately – they’ll be the rule not the exception.
The real question, then, is whether the President’s plan would lower the cost of premiums from what they would be or increase them. Here, we don’t have to rely on hearsay or news articles – the Congressional Budget Office has offered its official view on the question.
According to the CBO, Americans buying the same coverage they have today in the individual market will see premiums fall by 14 to 20 percent compared to what they would pay without health insurance reform. This results from two important things that reform will do:
- First, the President’s Proposal introduces greater competition in the insurance market by establishing state-based exchanges where insurers will need to compete for business. In addition, the proposal streamlines administrative costs by standardized forms and reducing the paperwork burden of providers. CBO assumes that competition and administrative savings in the reformed market will generate significant savings, which will reduce average premiums for a comparable package of benefits by 7 to 10 percent compared to the cost of such benefits without reform in the individual market.
- Second, as a result of insurance market reforms that will be in place in the individual market and because of the individual responsibility requirement for coverage, CBO assumes that millions more people will have access to the individual market. According to the CBO, the impact of bringing these new people – many of whom are younger and healthier – into the market will help reduce premiums by 7 to 10 percent in the individual market.
But wait, maybe you’ve heard opponents saying that CBO actually found that premiums would go up? Again, the facts matter here. CBO assumes that under the President’s Proposal individuals purchasing coverage in the reformed individual market will have access to a wider range of health benefits than they have in today’s individual market. So people may choose to buy better coverage. Some may pay more because they are getting more for their money.
And let’s not forget that the President’s plan includes the largest middle class tax cut for health insurance in our nation’s history. Critics also fail to point out that the majority of people purchasing coverage in the individual market will receive tax credits that on average will cover two-thirds of their premium. Once the impact of these new tax credits are taken into account, many people in the individual market could see their premiums drop by almost 60 percent compared to what they would have paid without health insurance reform.
Dan Pfeiffer is White House Communications Director