CBO: ObamaCare will drive insurance premiums higher

posted at 3:30 pm on November 30, 2009 by Ed Morrissey

And that’s bad news for the 83% of Americans who won’t buy their health insurance through an “exchange.”  The CBO report stresses that the increase in premiums will be offset by subsidies for those who qualify, but that means that American taxpayers will be footing the bill for the increase.  The report also calls into question — again — one of the primary funding mechanisms for ObamaCare:

Individual insurance premiums would increase by an average of 10 percent or more, according to an analysis of the Senate healthcare bill.

The long-awaited report by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) also concluded that subsidies provided by the legislation would make coverage cheaper for those who qualify. …

Though Republicans will seize on the projections that insurance premiums for individuals would increase, Democrats will highlight the conclusion that the legislation would lower premiums by 56 to 59 percent for those individuals who would receive subsidies to buy insurance on the exchange created by the legislation. Of those who participate in the exchange, 57 percent would be eligible for subsidies. The subsidy would cover about two-thirds of their premiums, the report says.

This exchange, open to individuals and small-business employees, would provide coverage to just 17 percent of the marketplace, the report notes.

But this may be the most significant part of the report, and it comes at the end of The Hill’s report:

The analysis does not measure the effects on premiums of a proposed excise tax on the most expensive insurance plans. Consistent with their previous reports, the CBO and the JCT predict that most people who currently have so-called Cadillac insurance plans would opt for less expensive insurance to avoid the tax.

Why is this so significant?  The Senate plan envisioned a $259 billion revenue stream from this tax in the first decade.  As I argued at the time, this static tax analysis would be proven dead wrong and leave a huge hole in the funding of ObamaCare.  The CBO and the JCT apparently agree.

As far as the insurance premiums go, this is yet another example of ObamaCare bending the cost curve … upward.  Why will premiums increase?  Guaranteed issue and expansion of third-party payer services.  Instead of exercising cost control through real reform, the new plan will intensify the existing structural problems of cost in the American health-care system.  And since the covered won’t be paying that cost themselves, the rest of the taxpayers who don’t participate in the exchange system will be left with the bill through the federal subsidy program.


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Call your senator TODAY and EVERY DAY THIS MONTH! Wish them a Merry Christmas and tell them to vote NO

ThackerAgency on November 30, 2009 at 3:33 PM

On the road today, I had the radio on and the lady on the news said that premiums would either go up or stay the same. I heard that and thought…bullsh*t. It is amazing how often the media is wrong.

Terrye on November 30, 2009 at 3:34 PM

So government intervention is going to make the costs rise? Who could have seen that coming?

John Deaux on November 30, 2009 at 3:35 PM

And since the covered won’t be paying that cost themselves, the rest of the taxpayers who don’t participate in the exchange system will be left with the bill through the federal subsidy program.

thanks dear leader

*shaking the head*

cmsinaz on November 30, 2009 at 3:36 PM

New Line of Insurance Offered to Cover Risks of Loss Under Democrats’ Health Care Proposals http://optoons.blogspot.com/2009/10/new-line-of-insurance-offered-to-cover.html

Mervis Winter on November 30, 2009 at 3:36 PM

“I’ll tell you what….how about you give me your money, we’ll go out back, I’ll kick you in the nuts, and we’ll call it even, ok?”

-Vegas Vacation

Chuck Schick on November 30, 2009 at 3:38 PM

Is this Reform Or Making Things Worse?

LFRGary on November 30, 2009 at 3:38 PM

Quick… where are the trolls that said that this would NOT affect your insurance rates?

Skywise on November 30, 2009 at 3:39 PM

Why does “Cost Control”, by default, always mean lower costs?

Can’t we have a controlled increase in cost?

C’mon guys….get with the program.

BobMbx on November 30, 2009 at 3:40 PM

It doesn’t lower costs – it increases them.

It wouldn’t help reduce the deficit -it will explode it.

It doesn’t improve quality – it destroys it.

Add to that taking away personal freedoms and replacing that with governmental control makes you wonder, why are we THEY doing this?

Juno77 on November 30, 2009 at 3:40 PM

My mistake. Here’s the link.

LFRGary on November 30, 2009 at 3:41 PM

Sounds like they want to spread other people’s money around once again. At what point will it not pay to work and be more beneficial to get on the government gravy train instead?

joedoe on November 30, 2009 at 3:42 PM

Reducing costs my foot! Here is a simple perspective…

Ostensibly the “money” (taxes, cuts) will be going to insure the bottom 10-12 million of the 35 million (folks who should be getting Medicaid anyway).

It’s gonna cost at least $2.5 billion, just for them. The rest are supposedly going to “pay” for themselves. That’s up about $18K per person! Talk about Cadillac plans for the poor!

Agrippa2k on November 30, 2009 at 3:44 PM

“Instead of exercising cost control through real reform, the new plan will intensify the existing structural problems of cost in the American health-care system.”

Oh… then by all means, full steam ahead!

Seven Percent Solution on November 30, 2009 at 3:44 PM

It doesn’t lower costs – it increases them.

It wouldn’t help reduce the deficit -it will explode it.

It doesn’t improve quality – it destroys it.

Add to that taking away personal freedoms and replacing that with governmental control makes you wonder, why are we THEY doing this?

Juno77 on November 30, 2009 at 3:40 PM

But other than all of that, Obamacare will be great for America.

UltimateBob on November 30, 2009 at 3:45 PM

Well there we have it. The democratic plan has been exposed, and I’m expecting the liberals not to care that we know.

Timber Wolf on November 30, 2009 at 3:47 PM

Pretty basic, supply and demand…pricing and demand…
If you raise the price, demand will drop, so basing your figures on high demand, low prices, is foolish when the prices will raise, the demand will lesson and you will have a smaller base to tax.
This is so basic it is almost embarrassing that liberals don’t understand that.
If you raise the price (like taxing it) demand will drop and you will have less base to tax…how much obvious can it get?
Their answer is that you tax it more to raise more money…and guess what, even less demand.
Government has never been able to control anything economic…but they have been able to screw it up pretty good.

right2bright on November 30, 2009 at 3:48 PM

SNL, of all places, had it right…”How can you lower your budget and give 30 million more people insurance”…
Even they get it…
Liberal posters, please, explain your perpetual money machine to us…please.

right2bright on November 30, 2009 at 3:50 PM

Chuck Schick on November 30, 2009 at 3:38 PM

Or, predating it by about 50 years…”I will gladly pay you Tuesday for a hamburger today”…

right2bright on November 30, 2009 at 3:52 PM

Not very patriotic for most people who currently have so-called Cadillac insurance plans to opt for less expensive insurance to avoid the tax.

NOT. PATRIOTIC.

jukin on November 30, 2009 at 3:59 PM

Do I have this straight-

The 83% of people who won’t be getting their insurance thru the govt exchange will be paying 10% more to help fund up to 2/3 of the premiums for the 17% who will be utilizing the govt plan?

katiejane on November 30, 2009 at 4:02 PM

”I will gladly pay you Tuesday for a hamburger today”

Thats it! The J. Wellington Wimpy Healthcare Plan

JonPrichard on November 30, 2009 at 4:03 PM

And since the covered won’t be paying that cost themselves, the rest of the taxpayers who don’t participate in the exchange system will be left with the bill through the federal subsidy program.

Sounds to me like Obama is trying to win back votes from the “rich” by redistributing the Obamacare tax burden to the middle class folks as well.

Smart guy.

/s

Mark Boabaca on November 30, 2009 at 4:03 PM

I stopped calling and writing Mary Landrieu. My last email to her said something like … “Meh … go ahead and vote for it … I’m done with you … looking forward to your next election where I’ll devote 100 percent of my off-work time and effort to ousting your ass. Better hope I don’t lose my job – cuz if that happens I’ll devote ALL of my time from the moment I wake up until my head hits the pillow that night to defeating you.”

HondaV65 on November 30, 2009 at 4:03 PM

The 83% of people who won’t be getting their insurance thru the govt exchange will be paying 10% more to help fund up to 2/3 of the premiums for the 17% who will be utilizing the govt plan?

katiejane on November 30, 2009 at 4:02 PM

That’s “fair”, right?

Mark Boabaca on November 30, 2009 at 4:04 PM

looking forward to your next election where I’ll devote 100 percent of my off-work time and effort to ousting your ass. Better hope I don’t lose my job – cuz if that happens I’ll devote ALL of my time from the moment I wake up until my head hits the pillow that night to defeating you.”

HondaV65 on November 30, 2009 at 4:03 PM

She will have the last laugh when she gets some cushy lobbyist/GS job while you’re collecting unemployment, unfortunately.

They don’t care one iota about anyone but their own.

Mark Boabaca on November 30, 2009 at 4:05 PM

Every single word about costs is a game.

It’s about power.

notagool on November 30, 2009 at 4:10 PM

Consistent with their previous reports, the CBO and the JCT predict that most people who currently have so-called Cadillac insurance plans would opt for less expensive insurance to avoid the tax.

Libs always thing their policies act in a vacuum. If you raise tax rates, surely that will increase tax revenue, right? Libs never take into account behavior changes based on their policies.

NoFanofLibs on November 30, 2009 at 4:14 PM

Your prediction is right on. The Associated Press is already spinning that the CBO scores it as lowering premiums. See this link:http://www.google.com/hostednews/ap/article/ALeqM5ji0SNLAAEyIxP5mGDPzeTju9n5FQD9CA1Q3G0.

kazanboyets on November 30, 2009 at 4:14 PM

Premiums will not rise 10%; they will rise at least 20% up to 40%, or so a friend of mine in the insurance business tells me.

Compassionate Fascism at work.

Dhuka on November 30, 2009 at 4:21 PM

Liberals: This will make health insurance more affordable

Everyone else: Health insurance premiums will go up for 80+% of Americans

Liberals: Well, we’ll get the government to subsidize the difference!

Everyone else: So you’re going to raise the debt to astronomical levels just to reverse one of the negative consequences of your policy?

Liberals: No, we’ll just raise taxes!

Everyone else: So, you’re going to tax me then subsidize me to make health insurance better?

Liberals: Yup! Your Welcome!

gwelf on November 30, 2009 at 4:22 PM

Simple. Make down sizing your plan a felony! Pelosi style.

ronsfi on November 30, 2009 at 4:28 PM

HondaV65 on November 30, 2009 at 4:03 PM

God, I love that kind of talk!

belad on November 30, 2009 at 4:34 PM

Liberals: taking the country back to the 1700′s one tax at a time!

search4truth on November 30, 2009 at 4:45 PM

The government got involved in the credit market and my interest rates went up and I lost my line of credit.

Johan Klaus on November 30, 2009 at 4:52 PM

Even if you were unable to tax insurance plans becuase they were no longer “Cadilac”, wouldn’t you still be taxing the increased earnings provided by the shift of money from Insurance to base pay?

Wouldn’t you still be collecting the money?

Thune on November 30, 2009 at 4:53 PM

“CBO: ObamaCare will drive insurance premiums higher”

Of course it will! But cost is not a factor….or have you had your head in the sand for the past 11 months?? This President and this Congress don’t give a damn about COST. It’s not their money their spending, so why should they??

The fraud in the White House certainly doesn’t care; he’s spending it faster than they can print it!

Lord have mercy. Is it 2012 yet?

GoldenEagle4444 on November 30, 2009 at 5:04 PM

I’ve posted this elsewhere, but do a comparison for yourself. Go to one of the health insurance quote systems like http://www.ehealthinsurance.com and look at the cost of insurance for a 25 year old in any state VS the cost in Massachusetts (where RomneyCare approximates what Obama/Pelosi/Reid wish to do to you). Almost everywhere else, companies offer high deductible/high copay plans aimed at young healthy people for about $30 per month. The minimum plan in Massachusetts starts at over $300 per month.

Stegall Tx on November 30, 2009 at 5:16 PM

the increase in premiums will be offset by subsidies for those who qualify

This is bullshit! There is NO OFFSET! Either you are going to pay 10% more (congradulations CBO, mine went up 10/1), or you’ll qualify for a ‘reduced premium’.

The current administration is also killing the English language!

GarandFan on November 30, 2009 at 5:18 PM

One significant thing that is overlooked with the Senate’s Obamacare is what happens to all the taxes that are collected BEFORE Obamacare kicks in?

If history is any guide, they’ll put this money into another mythical lock box which is then spent and filled with IOUs by Congress. Then when it comes time this money is needed, it won’t be there, requiring another revenue stream (and/or more deficits) to fill that which has been already spent on something else.

drfredc on November 30, 2009 at 5:21 PM

So switch to the lower price.

Frankly, this is not relevant.

You can pay for a cadillac plan if you like. But your premiums are going to skyrocket no matter what happens.

Be brave when opening your next premium bill.

AnninCA on November 30, 2009 at 5:41 PM

Call your senator TODAY and EVERY DAY THIS MONTH! Wish them a Merry Christmas and tell them to vote NO

ThackerAgency on November 30, 2009 at 3:33 PM

Yeah right, I’m going to keep melting the phone lines to BOXER’s office. I have actual accomplishments I want to achieve, like walk the cat or ball socks.

leftnomore on November 30, 2009 at 5:48 PM

Take a deep breath and repeat after me: 2010… 2010…2010.

leftnomore on November 30, 2009 at 5:49 PM

Puhhhhleeeeease. Libs constantly point to the bankrupt medicare program as a successful template, yet reject simply expanding that program for the 13% of “”””””uninsured”””””. COMPLETE FRAUD.

marklmail on November 30, 2009 at 5:54 PM

Take a deep breath and file a W-4 claiming 99 dependents then tell the IRS to pound sand: this government is worse than Great Britian at the time of independnce.

Onager on November 30, 2009 at 6:04 PM

And since the covered won’t be paying that cost themselves, the rest of the taxpayers who don’t participate in the exchange system will be left with the bill through the federal subsidy program.

REDISTRIBUTING THE WEALTH!

So the producers that make this country work get to further fund the pants draggin, quart drinkin, dope smokin, professional baby makers, who contribute nothing, but merely leech off the rest of us and vote for democrat community organizers!

The unions will get to keep their cadillac plans free from taxation and any increased cost to them will be borne by business, thus you and I.

I will not buy union made if I have a choice, and I will not buy government owned or bailed out!
I damn sure will vote and make I will it as hard on the fools who voted this travesty upon us as I can in any little ways that I can!
Get in their faces, call them liars, idiots and theives! I will not be led submissively into slavery and reperations

dhunter on November 30, 2009 at 6:41 PM

Yet more confirmation of my belief that D.C. actually stands for dipshit central.

boomer on November 30, 2009 at 7:28 PM

Under this Administration and Congress, Care First, Blue Cross, and Blue Shield, will be considered a Cadillac plan.
It will be SHIT for all, that is what’s fair, except for those that mandate SHIT to us, they will be exempt.

Some animals are more equal than others.

M-14 2go on November 30, 2009 at 7:43 PM

AnninCA on November 30, 2009 at 5:41 PM
—–
Ann,

Follow this with me, okay?

Pelosi et al raised taxes on so-called “cadillac” plans.

When prices go up, people look for lower-cost alternatives. Even the people who know basic econ know that when prices on meat go up, people shift from buying steaks to buying hamburger or “ground meat”…

So, because people will shift away from “cadillac” plans, the taxes raised will fall short of the estimates.

The difference will be made up either by printing more money (i.e. raising the deficit and the debt) or by raising taxes elsewhere.

Mew

acat on November 30, 2009 at 8:08 PM

Somehow ABC News Radio, is a reporting that the CBO is saying the Obamacare is going to lower everyone’s insurance premiums. How does this happen?

Cindy Munford on November 30, 2009 at 8:40 PM

The CBO report stresses that the increase in premiums will be offset by subsidies for those who qualify, but that means that American taxpayers will be footing the bill for the increase.

Yeah, tell us something we don’t know. That and the threat of jail time makes it obvious they’re forcing us into socialized medicine.

We let them get the foot in the door with having to have auto insurance. I was going to say that having to have to pay tag and drivers license fees are fair for highway maintenance, but there’s also the gas tax (in itself fair…unless you’re filling your lawn mower I suppose) and Federal money for highways that comes mostly from income taxes.

At any rate, our sheeple mentality concerning taxes have opened many avenues for them to not only shear us monetarily but to also take away our fundamental Liberty.

Dr. ZhivBlago on December 1, 2009 at 12:23 AM

Kipling wrote:

… [W]e were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”

Seems appropriate. History rhymes afterall.

Voyager on December 1, 2009 at 2:46 AM