Health Care Premiums Higher Under Proposed Legislation

Iowans can’t afford to pay more for health care.  Costs are rising three times faster than the rate of inflation and straining family budgets.  They are making it increasingly difficult for employers to offer health insurance to employees.  Driving down health care costs should be a major focus of health care reform.  Yet, pending legislation in the Senate and House of Representatives would result in higher premiums for most Americans, according to the nonpartisan Congressional Budget Office, the Joint Committee on Taxation, and the Office of the Actuary at the U.S Department of Health and Human Services.

Here are the facts.  A September 22 letter from the CBO director to the Finance Committee Chairman said, “Premiums in the new insurance exchanges would tend to be higher than the average premiums in the current-law individual market.”  During Finance Committee action on legislation in September, the CBO director also said the new fees on health insurers “would raise insurance premiums.”  During the same mark-up, the Joint Committee on Taxation chief of staff said, “Basic economics is that the fee will be reflected in higher premium costs.”  On October 21, the HHS Office of the Actuary wrote in a memo about the pending House bill, “In aggregate, we estimate that for calendar years 2010-2019 National Health Expenditures would increase $750 billion, or 2.1 percent over the updated baseline projection.”

In addition to a new insurance fee that would be passed on to consumers, pending legislation drives up costs by defining what kind of insurance you can buy.  It would become illegal for insurers to sell many of the policies that people are actually enrolled in today.  The new federal standard would be higher than many of the policies sold today, and new enrollees would have to pay about 10 percent more to meet the government benefit standard in the Finance Committee bill, according to analysts.  It would be even higher under the House and Senate HELP Committee bills.  And, so-called grandfathering policies wouldn’t apply if you plan to move or change your policy to add coverage for vision or dental.  Costs are also driven up by new “age rating” rules in pending legislation.  These rules set limits on the amount that premiums can vary between younger and older enrollees.  Premiums could go up by almost 70 percent for younger, healthier enrollees.  Recent college graduates would be hardest hit by these proposals.

So, instead of costing less, health insurance premiums would become even more expensive if current health care reform proposals were enacted.  Additionally, despite almost $1 trillion in new spending, most Americans would not qualify for newly created subsidies to help pay for higher premiums. The CBO has said that, ten years from now, about seven percent of people who have insurance today would be getting government subsidies.  As a result, 93 percent of the 160 million Americans with coverage today would see higher taxes, fewer choices and more expensive health insurance premiums.