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Democrats' Health Proposals Might Cost $14K per Year per Extra Insured

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What You Need to Know

  • Extra subsidies for low-income people could cost about $19,000 per year extra insured person.
  • The annual cost of scrapping the current premium tax credit subsidy income cap might be $10,800 per additional insured life.
  • CBO math suggests that providing high premium subsidy tax credits for all unemployed people would be the most efficient uninsurance-reducing strategy.

Commercial health insurance provisions in H.R. 5376 — the Democrats’ Build Back Better social spending package — could reduce the number of uninsured Americans by about 3.9 million, or about 14%, in 2031, according to new estimates from the Congressional Budget Office.

Calculations based on the CBO predictions suggest that the provisions could cost an average of about $14,000 per year, over the next 10 years, for every additional person who was insured in 2031.

The fate of this package could affect what health insurance professionals have to sell later this year.

The fate of the package could also affect what other financial professionals will be telling clients under age 65 about pre-retirement health care cost planning.

Build Back Better Basics

The Build Back Better bill is one of two big packages of legislation that Democrats are trying to maneuver through the House and Senate.

The Build Back Better bill includes many social program provisions, including a section that could add dental insurance and vision insurance to the traditional Medicare program.

The other package, the American Jobs Plan package, would provide cash for roads, bridges, flood control projects and other physical infrastructure.

Federal fiscal 2022 started Oct. 1. The official federal government budget shows that the government could generate about $4.2 trillion in revenue this year and spend about $6 trillion.

President Joe Biden has estimated that his version of the Build Back Better package could cost about $3.5 trillion over 10 years, or about $350 billion per year. That would amount to about 5% of the annual spending now in the official budget forecasts.

Some Democrats in Congress have backed versions that could cost about $7 trillion over 10 years. Sen. Joe Manchin, D-W.Va., has said that he would like to hold the total cost to $1.5 trillion.

The Big Picture

The CBO is an agency that helps members of Congress analyze legislation and government operations.

A CBO team worked with analysts from another arm of Congress, the Joint Committee on Taxation, to prepare the new Build Back Better health insurance provision analysis at the request of Rep. Jason Smith, R-Mo.

Smith is the highest-ranking Republican on the House Budget Committee.

The CBO and Joint Committee on Taxation analysts operate under strict rules that require them to predict what will happen to the U.S. economy and federal government operations over time, then estimate how legislation will affect the “baseline estimates.”

For Smith, the analysts looked only at the effects of major Build Back Better package provisions that are likely to affect health insurance for people under age 65. The analysts did not look at the provisions that affect Medicare or Medicaid benefits for people 65 and older.

The analysts predicted those provisions would increase the federal budget deficit by about $11 billion this year, $42 billion in federal fiscal 2023, and $77 billion in 2031.

The bill could increase the deficit by a total of $553 billion over the period from 2022 through 2031, according to the analysts.

More on this topic

H.R. 5376 Details

The CBO and Joint Committee on Taxation analysts looked at four sets of provisions in a version of H.R. 5376 that was released Sept. 27.

Section 137501 would increase the premium tax credit subsidies for people who buy health coverage through the Affordable Care Act public exchange system, and it would eliminate rules that have kept people with income over 400% of the federal poverty limit from using the subsidies.

The analysts predicted this provision would cost $209.5 billion over 10 years, or about $21 billion per year, and reduce the number of people uninsured in 2031 by 1.4 million.

This provision could cost about $15,000 per year for every life cut from the 2031 uninsured total.

Section 137502 would change the current rule that defines employer-sponsored coverage to be affordable for an employee with a family if the coverage for the employee is affordable, even if coverage for the family is not affordable.

The analysts predicted this provision would cost $10.8 billion over 10 years, or about $1.1 billion per year, and reduce the number of people uninsured in 2031 by fewer than 100,000.

This provision could cost about $11,000 per year for every life cut from the 2031 uninsured total.

Sections 137504, 137505 and 30701 would provide extra help for people income below 138% of the federal poverty level, who are now shut off from access to premium tax credit subsidies,

The analysts predicted these provisions would cost $323 billion over 10 years, or about $32 billion per year, and reduce the number of people uninsured in 2031 by 1.7 million.

These provisions could cost about $19,000 per year for every life cut from the 2031 uninsured total.

Section 137507 would make rich premium tax credit subsidies available to people who were unemployed, even if those people had a high income.

The analysts predicted this provision would cost $10.6 billion over 10 years, or about $1.1 billion per year, and reduce the number of people uninsured in 2031 by than 500,000.

This provision could cost about $2,100 per year for every life cut from the 2031 uninsured total.

Benchmarks

Centers for Medicare & Medicaid Services analysts show, in a health care consumption table, that the United States will spend an average of about $13,000 per person on health care for all residents in 2022.

Public or private insurers or other “payers” will pay about $11,700 per person, according to the CMS forecast.

Individuals could pay an average of about $1,300 each out of their own pocket.

(Image: alphaspirit/Shutterstock)