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Life Health > Health Insurance > Your Practice

CBO Combs Through H.R. 3962

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The Congressional Budget Office says even low-end health coverage would still be expensive if the House health bill worked as expected, and that repealing health insurers’ “antitrust exemption” would do little to cut costs.

CBO analysts have come to those conclusions in reports generated at the request of the lawmakers who are reviewing H.R. 3962, the Affordable Health Care for America Act bill.

In one report, the analysts answer a question from House Ways and Means Chairman Charles Rangel, D-N.Y., about what enrollees would pay for coverage if they bought a “relatively low cost plan” through the new health insurance exchange system that H.R. 3962 would set up.

The House bill would provide subsidies for eligible individuals and families earning less than 400% of the federal poverty level, and the bill would adjust the eligibility levels for inflation.

For taxpayers who earn more than 400% of the FPL and are not eligible for subsidies, the cost of coverage would be high in a post-H.R. 3962 world.

Individuals earning $50,100 per year, for example, or 425% of the FPL, would pay about $5,300 per year in premiums, and they would be responsible for an average of $2,000 per year in deductibles, co-payments and other “cost sharing,” according to CBO estimates.

A family of four earning 425% of the FPL — $102,100 per year – could expect to pay $15,000 per year for coverage and take responsibility for an average of $5,500 per year in cost-sharing, the CBO estimates.

But House leaders contend that the full, unsubsidized cost of the coverage is lower than it would be if the country fails to implement a health reform bill.

The $15,000 annual premium bill for a family of four “is well below the $24,000 family premium expected if Congress fails to act and premiums grow as projected under current law,” House leaders say.

Meanwhile, the CBO has released another report stating that repealing the limited antitrust exemption accorded health insurers and medical malpractice insurers under the McCarran-Ferguson Act “will have no significant effect” on the premiums charged for private health insurance.

The H.R. 3962 antitrust repeal provision would offer “safe harbors” for some joint industry activities, such as compilation of historic loss data, and insurance groups say antitrust repeal proponents have exaggerated the effect of the existing provision on market concentration.

Based on information from the Justice Department, the Federal Trade Commission, consumer groups, private attorneys and the National Association of Insurance Commissioners, Kansas City, Mo., the CBO estimates that the effect of the H.R. 3962 antitrust repeal provision “would be very small, and thus that enacting the legislation would have no significant effect on the premiums that private insurers would charge for health insurance.”

If the bill would prevent insurers from engaging in prohibited practices, it might do something to lower premiums, the CBO says.

But “that effect is likely to be small because state laws already bar the activities that would be prohibited under federal law if this bill was enacted,” the CBO says.

The CBO analysis refutes claims by consumer groups that antitrust repeal could cut insurance costs by 20%, according to the Physician Insurers Association of America, Rockville, Md., which represents medical malpractice insurers owned by physicians’ groups.

Allison Bell contributed information to this report.


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