ABC's Jonathan Karl reports:
President Obama and Republican Sen. Lamar Alexander made competing claims about how the Democratic plan would affect premiums. Sen. Alexander says premiums for those in the individual insurance (non-employer) market will go up an average of 10 to 13 percent. The president says it would only go up for those choosing better coverage and that “The costs for families for the same type of coverage that they're currently receiving would go down 14 percent to 20 percent.”
Both cite a Congressional Budget Office (CBO) analysis of the Senate bill done at the request of Senator Evan Bayh.
Who is right?
Well, the CBO analysis does say, flatly, that “the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.”
Why are premiums going up? CBO cites the combination of three factors:
The net effect of those three factors: Premiums would be 10 to 13 percent higher for the average policyholders.
President Obama’s claim of premium reductions of “14 to 20 percent” comes from adding factors two and three. The problem: You can’t ignore factor one. That’s why CBO’s conclusion is that, on average, people in the individual market would see their premiums go up 10 to 13 percent. You can keep your old, less generous plan, but only until 2018.
But it doesn’t end there.
The bill also includes generous subsidies for families with incomes under $88,000. Those who get taxpayer subsidies would see their out-of-pocket premium cost reduced by “roughly 56 to 59 percent.” And 57 percent of those in the individual market would be eligible for subsidies.
Three final, important points: