Cavuto cites CBO to claim Senate health bill would “jack up premiums...for a lot of Americans”

From the November 30 edition of Your World:

CAVUTO: Meanwhile, to something that could dampen shoppers' mood, sticker shock when buying health insurance -- the Congressional Budget Office just announcing that the Senate health care bill will jack up premiums by more than 10 percent for a lot of Americans.

Utah's Republican Senator Bob Bennett is not surprised. He's in D.C., where -- I don't know if I told you -- I will be heading this Thursday for that big old jobs summit. Senator, always good to have you.

SEN. BENNET (R), UTAH: Thank you.

CAVUTO: These are some alarming figures. How reliable are they?

BENNETT: Oh, I think they're very reliable, and they confirm what we have suspected all along.

If you go back to the campaign, President Obama promised that every American, typical American family would see their health care premiums cut by $2,500 a year. Now the CBO says, no, this program would increase them by $5,000 a year, roughly. That's a pretty bad swing, $7,500 in the wrong direction for Americans.

CAVUTO: All right.

Actual CBO: Premiums would not rise for vast majority of Americans

Premiums will only rise for nongroup market-- about 17 percent of the market in 2016. In a November 30 analysis, the nonpartisan CBO estimated that for premiums, the “largest effects would be seen in the nongroup market, which would grow in size under the proposal but would still account for only 17 percent of the overall insurance market in 2016. The effects on premiums would be much smaller in the small group and large group markets, which would make up 13 percent and 70 percent of the total insurance market, respectively.”

Federal subsidies will actually lower premiums from current costs for many in nongroup market. The CBO estimated that while the average premium per person in the nongroup market would be about 10 to 13 percent higher in 2016, “those figures indicate what enrollees would pay, on average, not accounting for the new federal subsidies. The majority of nongroup enrollees (about 57 percent) would receive subsidies via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium, CBO and JCT [Joint Committee on Taxation] estimate. Thus, the amount that subsidized enrollees would pay for nongroup coverage would be roughly 56 percent to 59 percent lower, on average, than the nongroup premiums charged under current law.”

Increase in individual premiums due to broader scope of coverage. The CBO estimated that premiums would go up because the average plan would “cover a substantially larger share of enrollees' costs for health care (on average) and a slightly wider range of benefits.” From the CBO's analysis:

Average premiums would be 27 percent to 30 percent higher because a greater amount of coverage would be obtained. In particular, the average insurance policy in this market would cover a substantially larger share of enrollees' costs for health care (on average) and a slightly wider range of benefits. Those expansions would reflect both the minimum level of coverage (and related requirements) specified in the proposal and people's decisions to purchase more extensive coverage in response to the structure of subsidies.

Premiums could decrease for large and small group insurance markets. The CBO also estimated that for the large-group market, which it said would make up 70 percent of the total insurance market in 2016, “the legislation would yield an average premium per person that is zero to 3 percent lower in 2016 (relative to current law).” Further, in “the small group market, which consists of employers with 50 or fewer workers, CBO and JCT estimate that the change in the average premium per person resulting from the legislation could range from an increase of 1 percent to a reduction of 2 percent in 2016 (relative to current law).”

Major cost-saving measures kick in after 2016. The CBO analyzed the impact on premiums for 2016, but as Jonathan Cohn noted on The New Republic's health care blog, “many of the cost-saving measures in the bill aren't expected to yield savings until after that date.” The Washington Post's Ezra Klein similarly wrote:

CBO is looking at 2016, which is long before the delivery system reforms will have really begun working, or the excise tax will have started restraining the growth in premiums costs, or the Medicare Commission will be aggressively experimenting to bring down costs first in Medicare and then in the system more generally. These are the numbers, in other words, from a world in which none of the cost control efforts work. In that world, health-care reform still does an enormous amount to help 30 or 40 million people, and a bit to help tens of millions more.