Premiums – The New Law

All health care fast facts are from the non-partisan Congressional Budget Office (CBO) and Center for Medicare and Medicaid Services (CMS).  Although they represent some of their most recent reports on this subject, they do not represent all of their reports on this subject.  Occasionally minor word adjustments may have been made for clarity or to reflect the updated nature of the statement.   As always, verify and view statements in their full context as often as possible.

The same substantial degree of uncertainty that surrounds the Congressional Budget Office (CBO) and Joint Committee on Taxation’s (JCT) estimates of the impact that the new health care law would have on insurance coverage rates and the federal budget also accompanies this analysis of the proposal’s effects on premiums.  Verify here
The actual future impacts of the PPACA on health expenditures, insured status, individual decisions, and employer behavior are very uncertain. The legislation would result in numerous changes in the way that health care insurance is provided and paid for in the U.S., and the scope and magnitude of these changes are such that few precedents exist for use in estimation. Consequently, the estimates presented here are subject to a substantially greater degree of uncertainty than is usually the case with more routine health care legislation.  Verify at Page 4
The nongroup market (individual market) would consist of coverage purchased individually through the new insurance exchanges that would be established, and coverage purchased by individuals and families directly from insurers.  Verify here
The average, unsubsidized 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 without the new law.  Verify here
Average premiums in the nongroup market would be higher primarily because the typical insurance policy in this market would cover both a substantially larger share of the average enrollee’s costs for health care and a slightly wider range of benefits.  Verify here
More than half of the enrollees in nongroup policies would get federal subsidies, and taking those subsidies into account, 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 prior law.   Verify here
An estimated 25 million health care Exchange enrollees (79 percent) would receive Federal government premium subsidies.  Verify at Page 5
Subsidies for health insurance coverage can affect people’s decisions about whether and how much to work.  A subsidy represents an increase in income, and some recipients may respond by working fewer hours (and thus offsetting part of the increase in subsidy income with a reduction in wage income).   Verify at Page 5
CMS estimates that the subsidy costs in 2018 would represent about 0.518 percent of gross domestic product (GDP), which exceeds the limit on the Federal cost of the premium and cost-sharing subsidy amount of 0.504 percent of GDP, with the result that the enrollee share of the total premium would generally increase in 2019 and later Verify at Page 5


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