November 30, 2009
"Obama's plan will save a typical family up to $2,500 on premiums..."
- Obama campaign handout, "Questions and Answers on Health Care Plan
While Democrats have alleged that their government takeover of health care will lower costs, the Congressional Budget Office (CBO) today confirmed that legislation being considered in the Senate (H.R. 3590) would raise health care premiums for struggling middle-class families:
- The CBO analysis found that in the non-group market, average premiums would be "about 10 to 13 percent higher in 2016...than under current law." The result would be a premium increase of $300 per year for individuals and $2,100 for families.
- CBO also found that the "user fees"-i.e., taxes-imposed in the Senate bill "would be largely passed through to customers in the form of higher premiums for private coverage."
- Contrary to President Obama's repeated promises that "You will not have to change [health insurance] plans," CBO also found that "relatively few non-group policies would remain grandfathered by 2016"-meaning millions of individuals will lose their current individual health insurance plans as a result of Democrats' government takeover of health care.
- While then-Senator Obama promised during his campaign that reform would lower health care costs by up to $2,500 per family annually, CBO's analysis confirmed that provisions in the legislation would raise health care costs. Specifically, CBO found that raising the required level of coverage for the individual market would raise premiums on its own-and "reduced cost sharing" from the new, richer benefit policies "would lead to greater use of medical services, which would tend to push premiums up further."
- While Democrats may claim that some individuals will pay lower premiums due to federal subsidies, those subsidies will help impose a new cost to the taxpayers of $2.5 trillion in the bill's first ten years of implementation alone. Furthermore, because the Reid bill does not link subsidy levels to rising medical inflation levels, even trillions of dollars in federal subsidies will be insufficient for families to afford insurance if health care costs continue to rise faster than incomes. Given CBO's analysis of health care cost growth as a result of provisions in the Senate bill, many may question the legislation's ability to deliver on this critical goal.
- Although CBO stated that premiums in the employer-based markets may remain constant, that judgment is based in part on an assumption that an individual mandate will increase participation in group coverage by encouraging young and healthy people to take up their employer's plan. However, some may find such a conclusion counter-intuitive, as many individuals may find it more affordable to circumvent the mandate and instead pay the tax penalty. For instance, the $2,250 maximum tax for a family not purchasing coverage in 2016 would be dwarfed by the $3,515 average family contribution for an employer-sponsored policy in 2009 alone.
The analysis from the non-partisan Congressional Budget Office raises further questions about the reasoning behind Democrats' efforts. While Republicans offered a bill that would reduce health care premiums by up to 10 percent according to CBO, the Democrat legislation would raise costs by at least that much-imposing new costs of up to $2,100 per family for non-group coverage. How much more evidence do Democrats need to desist their harmful government takeover of health care that will lead to higher premiums and lost coverage for millions of Americans?
For additional information, contact:
The House Republican Conference Policy Office