Senate Bill Will Lower Insurance Premiums, Even for Families Ineligible for Subsidies

The health care debate has gotten a bit bogged down in technicalities and the hot-button fights over the public option and abortion. It is, however, worth emphasizing the point made by MIT economist Jonathan Gruber in his latest analysis namely that the restructuring of the individual insurance market envisioned in the bill would save people a lot of money:


In the very short run, this won’t impact very many people since most people aren’t in the individual insurance market. But in the long run it’s hugely significant. After all, one of the most infuriating aspects of the health insurance market is how little consumer choice you have. I got an announcement this morning about a significant decision the CAP HR department made about our insurance coverage. Personally, I would have been happier had this choice gone another way. But they felt (I think correctly) that more people would have been upset with the other choice. But the point is that it’s odd that this decision had to be undertaken collectively. Different people place a different amount of value on “more choice of doctors” versus “more cable channels” as a use of our marginal dollar of monthly compensation, and in principle everyone would be happier making their own decision for themselves.

But the individual health insurance market is a disaster, so nobody actually wants their employer to cash out the value of their health benefits and let them go buy the insurance they want. Gruber is pointing out that the Senate bill will make the individual market work much better. This will save money, but also lead to more consumer choice and, hopefully, everyone ending up with options that are better-tailored to their actual desires.