That Health Care “Reform” Will Actually Force Us To Pay More For Insurance

America’s Health Insurance Plans commissioned a study from PriceWaterhouseCoopers recently on the Baucus health bill and it shows many things that we all expected and feared would happen. The cost of insurance will go waaaaay up….by about 18% on average ON TOP of the expected inflation.

Key Findings

• Health reform could have a significant impact on the cost of private health insurance coverage.
• There are four provisions included in the Senate Finance Committee proposal that could increase private health insurance premiums above the levels projected under current law:
  1. A new tax on high-cost health care plans,
  2. Insurance market reforms coupled with a weak coverage requirement,
  3. Cost-shifting as a result of cuts to Medicare
  4. and New taxes on several health care sectors.
• The overall impact of these provisions will be to increase the cost of private insurance coverage for individuals, families, and businesses above what these costs would be in the absence of reform.
• On average, the cost of private health insurance coverage will increase:
  1. 26 percent between 2009 and 2013 under the current system and by 40 percent during this same period if these four provisions are implemented.
  2. 50 percent between 2009 and 2016 under the current system and by 73 percent during this same period if these four provisions are implemented.
  3. 79 percent between 2009 and 2019 under the current system and by 111 percent during this same period if these four provisions are implemented.

America’s Health Insurance Plans asked PricewaterhouseCoopers to check out the impact of four components in the Baucus bill:

• Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.
• An excise tax on employer-sponsored high value health plans (or “Cadillac plans”) that in a few years could also raise premiums for some moderate value plans.
• Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers. These changes are expected to more than offset the potential reduction in cost shifting resulting from providing coverage to the uninsured.
• New taxes on health sector entities that are likely to be passed through to consumers.

And found the following:

This analysis shows that the cost of the average family coverage is approximately $12,300 today and could be expected to increase to approximately:

• $15,500 in 2013 under current law and to $17,200 if these provisions are implemented.
• $18,400 in 2016 under current law and to $21,300 if these provisions are implemented.
• $21,900 in 2019 under current law and to $25,900 if these provisions are implemented.

This analysis shows that the cost of the average single coverage is $4,600 today and could be expected to increase to:

• $5,800 in 2013 under current law and to $6,400 if these provisions are implemented.
• $6,900 in 2016 under current law and to $7,900 if these provisions are implemented.
• $8,200 in 2019 under current law and to $9,700 if these provisions are implemented.

…by 2019 the cost of single coverage is expected to increase by $1,500 more than it would under the current system and the cost of family coverage is expected to increase by $4,000 more than it would under the current system. This amounts to an additional 18 percent increase in premiums by 2019. The overall 18 percent increase is a composite of increases by market segment as follows:

• 49% increase for the non-group (individual) market;
• 28% increase for small employers (those firms with fewer than 50 employees);
• 11% increase for large employers with insured coverage; and,
• 9% increase for self-insured employers.

The overall impact of these provisions will be to increase the cost of private health insurance coverage for individuals, families, and businesses. The net impact of these increases on households would include the impact of these increases and the new subsidies provided under the bill.

You can check out the whole report here.

Senator Barrasso visited Fox News this morning and discussed the findings:

Liberal sites are crying about the study complaining that the study doesn’t take into consideration the subsidies:

But this accounting leaves out some pretty big things, starting with the subsidies that would help people buy insurance.

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Now, the subsidies are not available to everybody, since they phase out with income and are only available through the insurance exchanges. As a result, people with higher incomes really would face higher premiums.

Ed Morrissey:

…PWC wanted to take a look at the actual cost of premiums, not the impact on subsidies, which is a political rather than economic question. The subsidies will still be in place, but they will apply to policies that cost a lot more than Baucus projected.

How much more? Take a look at this analysis from page 6 of the report:

PwC also examined the impact of the excise tax on the mandated plans expected to be offered under the state health insurance exchanges detailed in the Senate Finance Committee Bill. We estimate that in many metropolitan areas, which tend to have higher than average medical costs, the lowest option plan (Bronze Plan) would be considered a “Cadillac plan” as early as 2016. By 2016 at least one of the mandated plans will be considered a “Cadillac plan” and be subject to the 40 percent excise tax in 17 of 50 states. By 2019 at least one of the mandated plans will be considered a “Cadillac plan” and be subject to the 40 percent excise tax in 24 of 50 states.

Barasso didn’t get fooled by the subsidy red herring, either. He notes that the subsidies don’t start until 2013, but the taxes and fees kick in immediately. That will start the price pressure on premiums next year, not in 2013, and it will actually make the problem of uninsured worse in the short run.

Besides, what was the rationale for the excise tax on Cadillac plans in the first place? It intended to discourage plans that allowed for overuse of the system. By the end of its first decade, the Baucus plan makes most plans subject to that tax, which means that there is no real penalty for offering them or buying them. It transforms quickly into another general industry tax and does nothing to encourage rational use of the system.

They want people to think that these taxes will only affect the rich, but by the time this is all through anyone making 25 grand will be considered rich by the Obama government. But sure, there will be people who benefit from the plan. Those who meet the standards for subsidies or those who get the government plan will see prices reduced at the cost of all the rest of us paying more. And still they estimate that 25 million will remain uninsured by this Baucus plan.

Just fantastic.

And remember, Obama said if we dig the plan we have currently we can keep it…he leaves out a key point tho:

The government would also levy more payroll taxes. Included in a footnote in the CBO report is the revelation that the government expects to raise an extra $83 billion in payroll taxes in the next 10 years thanks to the higher taxable wages they predict employers will offer in place of non-taxable health care benefits.

Wonderful.

Curt

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