CBO Reports on the Effect of Reform on Premiums

Under the Senate health care reform bill the average American will pay about the same for insurance as he or she pays now, the CBO and the Joint Committee on Taxation reported yesterday. Supporters of health care reform are hopeful that these findings will reassure moderate Senators who are concerned about cost increases.

Premiums for workers at small businesses, 13 percent of the insurance market, would stay about the same as they are now. Premiums for workers at large companies, 70 percent of the market, could decrease slightly.

Subsidies will reduce premium costs for most individuals who buy their own insurance. Roughly 57 percent of the private insurance market would qualify for federal subsidies. But for those purchasing insurance who do not qualify for subsidies, premiums would increase by about 10 to 13 percent. Yet these higher premiums would also buy more coverage, which partially explains their higher price tag.

As The Wall Street Journal notes, Democrats cite this study as evidence that the bill controls cost. Republicans, however, point out that even though the bill would reduce premiums, over time the cost of health care would still continue to rise.