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CBO: Public option premiums higher than private plans

RightinNYC

RightinNYC

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The public insurance option would typically charge higher premiums than private plans available in the exchange, according to the Congressional Budget Office analysis of the House bill.

That surprising conclusion raises doubts about Democratic promises that a government-run insurance plan would provide a lower-cost alternative to consumers.

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That estimate of enrollment reflects CBO’s assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan’s premiums would be only partially offset by the “risk adjustment” procedures that would apply to all plans operating in the exchanges.)
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CBO: Public option premiums higher than private plans - Live Pulse - POLITICO.com

There's a much-needed dose of reality. If you peruse any of the articles at places like dailykos, there are hundreds of comments saying things like "insurance is so expensive nowadays, I need a public option so I can afford to get coverage!"
 
RightinNYC said:
CBO: Public option premiums higher than private plans - Live Pulse - POLITICO.com

There's a much-needed dose of reality. If you peruse any of the articles at places like dailykos, there are hundreds of comments saying things like "insurance is so expensive nowadays, I need a public option so I can afford to get coverage!"
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Would it still give an option to those with pre-existing conditions, while not competing private plans out of existence? I might almost approve of that type public option.
 
Redress said:
Would it still give an option to those with pre-existing conditions, while not competing private plans out of existence? I might almost approve of that type public option.
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I believe (and I might be wrong) that the reform proposals already contain a clause that already requires private companies to give insurance to people with pre-existing conditions.

The CBO analysis also notes that only 6 million people would sign up for the public option.
 
This is going to give Wyden some running room for his choices amendment.

Also, the more robust plan did have lower premiums, IIRC.
I'm not happy about this! :2mad:
 
jackalope said:
What !? I have to read this ... thx for posting.
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jackalope said:
This is going to give Wyden some running room for his choices amendment.

Also, the more robust plan did have lower premiums, IIRC.
I'm not happy about this! :2mad:
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I was surprised by this, although I feel like I shouldn't be. I mean, when you think about it, it seems quite likely that a public plan would have higher premiums than a private plan - everyone who is very healthy (and thus low cost to insurers, resulting in low premiums) would stick with their plans, while those who are unhealthy (and thus high cost to insurers, resulting in high premiums) would shift to the public plan. They might find some administrative efficiencies, but not enough to make up for that fact.

This was the reason why I've always assumed that any public plan would end up being heavily subsidized by the federal government, regardless of what they promise when they pass it. Imagine a scenario where Congress enacts a public option open to anyone, everyone who says they can't afford their private insurance is giddy about making the change, and then they find out that the public option premiums would be higher than private options. There would be mass public outrage, which would lead to proposals to increase federal subsidies which would almost certainly pass under the guise of "creating competition."

Looking at it from that perspective, I don't see how a public option, robust or not, would result in lower premiums. That's not to say it wouldn't improve health care access for some people, but nothing comes for free.
 
RightinNYC said:
I was surprised by this, although I feel like I shouldn't be. I mean, when you think about it, it seems quite likely that a public plan would have higher premiums than a private plan - everyone who is very healthy (and thus low cost to insurers, resulting in low premiums) would stick with their plans, while those who are unhealthy (and thus high cost to insurers, resulting in high premiums) would shift to the public plan. They might find some administrative efficiencies, but not enough to make up for that fact.

This was the reason why I've always assumed that any public plan would end up being heavily subsidized by the federal government, regardless of what they promise when they pass it. Imagine a scenario where Congress enacts a public option open to anyone, everyone who says they can't afford their private insurance is giddy about making the change, and then they find out that the public option premiums would be higher than private options. There would be mass public outrage, which would lead to proposals to increase federal subsidies which would almost certainly pass under the guise of "creating competition."

Looking at it from that perspective, I don't see how a public option, robust or not, would result in lower premiums. That's not to say it wouldn't improve health care access for some people, but nothing comes for free.
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Wyden makes a strong argument that access to the exchanges and public plan must be widened, or you run the risk of sicker people being over-represented.

I am wicked surprised by the results too, especially since the major selling point is lower premiums. (Although, if they are going by national averages, it will still be lower for us!) I don't expect we'll qualify for any subsidies, but if we can pay the national average instead of what we pay now - we will save thousands of dollars.


The subsidies will be for any plan though (I think they're calling them 'affordability credits'), they are premium subsidies, and not plan subsidies. If that makes sense?
 
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jackalope said:
Wyden makes a strong argument that access to the exchanges and public plan must be widened, or you run the risk of sicker people being over-represented.

I am wicked surprised by the results too, especially since the major selling point is lower premiums. (Although, if they are going by national averages, it will still be lower for us!) I don't expect we'll qualify for any subsidies, but if we can pay the national average instead of what we pay now - we will save thousands of dollars.
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Couldn't that problem be largely resolved by removing the rules forbidding insurance companies from competing across state lines? If every insurer could compete nationwide, it seems reasonable to assume that costs would largely fall into line across the country.

The subsidies will be for any plan though (I think they're calling them 'affordability credits'), they are premium subsidies, and not plan subsidies. If that makes sense?
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That does make sense. Do you know if the premiums will be equivalent regardless of where you apply them? Or is it one of those "$500 credit toward purchase of a public plan or $250 toward purchase elsewhere" type things?
 
RightinNYC said:
I was surprised by this, although I feel like I shouldn't be. I mean, when you think about it, it seems quite likely that a public plan would have higher premiums than a private plan - everyone who is very healthy (and thus low cost to insurers, resulting in low premiums) would stick with their plans, while those who are unhealthy (and thus high cost to insurers, resulting in high premiums) would shift to the public plan. They might find some administrative efficiencies, but not enough to make up for that fact.

This was the reason why I've always assumed that any public plan would end up being heavily subsidized by the federal government, regardless of what they promise when they pass it. Imagine a scenario where Congress enacts a public option open to anyone, everyone who says they can't afford their private insurance is giddy about making the change, and then they find out that the public option premiums would be higher than private options. There would be mass public outrage, which would lead to proposals to increase federal subsidies which would almost certainly pass under the guise of "creating competition."

Looking at it from that perspective, I don't see how a public option, robust or not, would result in lower premiums. That's not to say it wouldn't improve health care access for some people, but nothing comes for free.
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and the cost of covering the presently uninsured.
 
Phoenix said:
and the cost of covering the presently uninsured.
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I'm not even really considering that, as the question of whether we should be spending those resources to expand coverage is totally separate from the question of whether this plan is an improvement for everyone else. One can be addressed without the other.

I find that the most useful way to look at the proposals is this: Pretend that we've already agreed to extend coverage to millions more people through some combination of loosening Medicaid restrictions/offering subsidies. Once that's decided, what is the most cost-efficient way to implement that proposal?
 
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RightinNYC said:
Couldn't that problem be largely resolved by removing the rules forbidding insurance companies from competing across state lines? If every insurer could compete nationwide, it seems reasonable to assume that costs would largely fall into line across the country.



That does make sense. Do you know if the premiums will be equivalent regardless of where you apply them? Or is it one of those "$500 credit toward purchase of a public plan or $250 toward purchase elsewhere" type things?
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I originally thinking exactly that with regard to just eliminating the restrictions of selling across state lines, but then it was pointed out to me that the insurance companies would just pool in whatever state had the loosest regulations and consumers would be worse off instead of better (similar to what happened with credit card companies, and Delaware (and South Dakota? is it? can't remember), for example.

Your question about will the subsidies for premiums be equivalent regardless of where you apply them is one I have been wondering about lately! I know they are tied to percentage of income spent on premiums in most cases, but I'm not sure what they use as a barometer - any plan you want? or some basic, lowest cost plan? I meant to check a few times and kept putting it off b/c there were basically five plans (2 in Senate and 3 in House), so I figured I'd just wait until it was one in each house. I hope it's tied to a basic plan, b/c if it's a percentage of premium for whatever plan you want, seems like that will encourage subsidies for higher cost plans.
 
jackalope said:
I originally thinking exactly that with regard to just eliminating the restrictions of selling across state lines, but then it was pointed out to me that the insurance companies would just pool in whatever state had the loosest regulations and consumers would be worse off instead of better (similar to what happened with credit card companies, and Delaware (and South Dakota? is it? can't remember), for example.
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I feel like there has to be some way to get around this problem. Imagine this proposal: The federal government allows insurance companies to compete across state lines, but instead of only being subject to state regulations, insurance companies that want to compete nationally have to agree to abide by a uniform set of federal regulations. Insurers would have the option of staying in the individual states they're in now and keeping their current rules, but could choose to accept the additional regulation and compete nationally if they would prefer to do so.

This isn't particularly well developed and there are probably some problems with it that I'm missing, but it seems like it would go a long way toward addressing this issue.

Your question about will the subsidies for premiums be equivalent regardless of where you apply them is one I have been wondering about lately! I know they are tied to percentage of income spent on premiums in most cases, but I'm not sure what they use as a barometer - any plan you want? or some basic, lowest cost plan? I meant to check a few times and kept putting it off b/c there were basically five plans (2 in Senate and 3 in House), so I figured I'd just wait until it was one in each house. I hope it's tied to a basic plan, b/c if it's a percentage of premium for whatever plan you want, seems like that will encourage subsidies for higher cost plans.
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Agreed. I haven't been getting particularly excited or riled about any individual proposal yet, because the final will is unlikely to resemble anything we've seen so far.
 
RightinNYC said:
I feel like there has to be some way to get around this problem. Imagine this proposal: The federal government allows insurance companies to compete across state lines, but instead of only being subject to state regulations, insurance companies that want to compete nationally have to agree to abide by a uniform set of federal regulations. Insurers would have the option of staying in the individual states they're in now and keeping their current rules, but could choose to accept the additional regulation and compete nationally if they would prefer to do so.

This isn't particularly well developed and there are probably some problems with it that I'm missing, but it seems like it would go a long way toward addressing this issue.
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:yes: Something like that would work. Wyden with his choices amendment attempts to address this, in some manner, I believe. Well, the exchanges are supposed to address this, but they are currently being limited, in terms of access, to very few people.

Something like you said, or something like Wyden talks about, both seem like good ideas.




RightinNYC said:
Agreed. I haven't been getting particularly excited or riled about any individual proposal yet, because the final will is unlikely to resemble anything we've seen so far.
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Very true....
 
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