Thursday, December 10, 2009

The Health of America, Part 21

On November 30th, the Congressional Budget Office released its analysis of the costs of Senate health reform bill. Applause from the press was deafening: "No Big Cost Rise in U.S. Premiums Is Seen in Study" (New York Times; "Senate health bill gets a boost" (Washington Post).

Did the Times or WaPo read CBO's report? That document concludes the Senate bill would have almost no effect on the price of health insurance for those covered by employer group plans (page 7), but would increase non-group insurance premiums by 10-13 percent (page 4-5). The Wall Street Journal clearly can read ("Some Health Premiums to Rise"), and supplies this chart:

source: December 1st WSJ

Lefty Democrats claim victory because the CBO also predicts (page 5) that government subsidies will lower non-group and small-group health care premiums substantially. This confuses price and cost, as Mickey Kaus observes:
Premiums will be higher because of health reform. The bill alleviates this for more than half of all participants in the new exchanges by extending income-based subsidies that will reduce the out-of-pocket cost of premiums by up to 60 percent as compared to what purchasers would pay without health reform. But that shouldn’t be mistaken for lowering the actual cost, which will still be borne by the nearly half of all purchasers who don’t receive subsidies.
In sum, as Critical Condition's Paul Howard says:
We're spending $450 billion on subsidies to drive up insurance premiums in the individual insurance market by 10-13% (according to the CBO), and this is defined as "success." Remember when health-care reform was about lowering costs?
Neither do I. As the Wall Street Journal editorializes:
Democrats don't care because their bill isn't really about "lowering costs." It's about putting Washington in charge of health insurance, at any cost.
A reminder to Dems: someone must fund subsidies by paying taxes. I wonder who?

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