ANALYSIS: Under Senate Bill, Families Would Pay 25% Less For Health Care In Individual Market

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Over the weekend, the Congressional Budget Office (CBO) released new estimates for how much a typical four-person family will spend on health care under the new merged Senate legislation. Below, I’ve compared the House bill with the Senate alternative and threw in the old Senate Finance Committee (SFC) numbers to show how Majority Leader Harry Reid (D-NV) improved the affordability measures for middle class Americans.

The chart below indicates what percentage of income a family of four purchasing coverage within the new health insurance exchanges can expect to spend in 2016 on a health care plan with an actuarial value of 70% (in 2016 dollars):

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Meanwhile, MIT Professor Jonathan Gruber ‘s new analysis relies on available CBO data to compare the cost of coverage within the Senate bill’s exchanges to the cost of an individual policy in the non-group market absent reform.

Even though the plan purchased under the Senate legislation would have an actuarial value of 70% — 10 percentage points higher than the policy sold in the individual market absent reform — a family would pay less for reform’s more substantial coverage than they would for a plan that offers less benefits and even fewer consumer protections in the unreformed individual market. Moreover, “the same plan that cost $6,000 without reform would cost $4,460 with reform, or 25% less,” Gruber concludes:

Analysis of the non-partisan information from the CBO suggests that for those facing purchase in the non-group market, the Senate bill will deliver savings ranging from $500 for singles to $1400 for families – even without subsidies. The savings are much larger for lower income populations that receive premium credits. This is in addition to the higher quality benefits that those in the exchange will receive, with actuarial values for low income populations well above what is typical in the non-group market today.

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Correction: the original post incorrectly assumed that the CBO calculated premiums in 2009 dollars. The numbers for 2016 are actually calculated in 2016 dollars.