This morning, former Bush adviser Karl Rove pulled out a Russert-esque white board to argue that premiums would increase under health care reform in the individual market. Rove relied on a series of Congressional Budget Office (CBO) numbers and claimed that tax increases, the cost shift from Medicaid expansion and insurance reforms could raise premiums by $4,000:
Four studies by outside groups have found the likelihood of higher premiums, but they are just estimates. The most solid numbers have come out of the CBO, but even then, it was only a partial state. Outside groups estimated that insurance premiums would increase by 20% to 50% under the bill over what they would otherwise be, and the CBO report, which looked at the three bottom insurance programs, found that in 2016, without reform, those policies would cost an average of $11,000. With reforms, they would cost $15,000 or an increase of roughly $4,000.
Rove’s reasoning is as pernicious as his math. In its September 22nd letter to the Senate Finance Committee the CBO does project that premiums in the none group market would cost approximately $6,000 for individuals and $11,000 for families, but it also demonstrates that health premiums would be cheaper for a majority of families. Here is how:
1. Overwhelming majority of Americas will pay less than $11,000: Under the House and Senate bills, an individual who does not qualify for subsidies would pay between $5,200 and $5,300 in premiums for a health policy from an exchange (saving up to $800). Premiums for family policies would cost between $14,100 and $15,000, but over two-thirds of exchange enrolless would qualify for subsidies and would spend less than $11,000 on their premiums. In fact, MIT economist Jonathan Gruber extrapolated the CBO data to argue families could actually see savings “ranging from almost $8500 for low income families to almost $1,400 for higher incomes.”
2. More value for the premium dollar: Ultimately, it’s misleading to compare a policy in the exchange with a plan in the individual market. Policies sold in the existing market offer less benefits and even fewer consumer protections. Without reform, older Americans or anyone with a pre-existing condition would not be able to find coverage in the individual market — much less afford it. In its September 22nd letter, the CBO writes that under reform, Americans would receive more value for the premium dollar (plans sold in the exchanges would have higher actuarial values).
All of this is explained in the CBO reports, but omitted in Rove’s white board arithmetic. Rove also misrepresents the so-called “cost-shift” between public and private payers and ignores reform’s the payment increases for both Medicare and Medicaid providers.