WASHINGTON — A report commissioned by the Blue Cross Blue Shield Association says that if the Senate health reform bill is enacted, individuals buying insurance on the open market will pay 54% more in premiums than they do today.
The analysis comes on the heels of a Congressional Budget Office report that estimated premium costs for individuals and the group market if all the Senate reform proposals were adopted and put into place by the scheduled 2016 implementation date. The CBO estimated that individuals would pay $5,800 a year for premiums, a slight increase from the $5,500 they could expect to pay under current law.
The individual premium, without federal subsidies, would also be about 10%-13% higher than premiums paid by group members under the reform proposal, said the CBO. But the agency estimated that slightly more than half of those individuals would be eligible for federal subsidies. Those individuals would actually pay 56%-59% less than someone in a group would pay, the CBO estimated.
The BlueCross analysis, which was conducted by the actuarial company Oliver Wyman Inc., estimated that individuals would pay $4,561 in annual premiums, or 54% more than they would pay without reform. Small group premiums (for employers with 2 to 50 workers) will be about 20% higher, according to the analysis. Both figures exclude medical inflation, so the increases could be even greater, said Jason Grau, an associate partner at Oliver Wyman and a co-author of the analysis.
The Wyman analysis calculated premiums for the year 2019, a few years after the market had settled into the new law, he said.
The CBO underestimated the effects of adverse selection, which he said was more likely, given that the Senate bill had minimal penalties for those who choose not to purchase insurance. The lack of stiff fines and the elimination of age rating—in which younger, healthier people pay less—means that insurers will have to raise premiums to cover costs for the older, sicker population likely to sign up for policies, said Mr. Grau.
“As the bill stands right now the protections that are in place and the incentives that are in place to encourage healthy people to participate, and to get really broad participation, [are] not at the level that you're going to need to achieve optimal affordability and ensure you that you have high coverage as well,” said Mr. Grau.
BCBS Association Senior Vice President Alissa Fox agreed that the Senate needed to figure out another way to encourage the young and healthy to purchase insurance. “The penalties to purchase and obtain coverage are very weak, and because of that, young, healthy people we estimate, are likely—many of them—to forego coverage,” said Ms. Fox in an interview.
The insurance organization risked inciting a political backlash by releasing the study in the midst of the Senate's debate, but Ms. Fox and other association officials said they had been in regular contact with the White House about their concerns and that the report was rigorous in its methods and conclusions.