CBO: We Are Going to Be Spending A Lot More On Health Insurance

Health care bloggers have been waiting with bated breath for the CBO's report on health insurance premiums, which came out today.  The upshot:  premiums in the large and small group markets, which account for the lion's share of non-government health insurance, will not be significantly affected.  Premiums in the individual market, however, will rise 10-13%.

The CBO estimates that this effect will come from three things:

1.  A large boost in the generosity of coverage
2.  Improved administrative efficiency (individual plans are the most expensive to administer)
3.  More healthy people in the pool.

You can claim this as a victory for the pro-reform side, because people are getting more coverage at somewhat better prices, or a victory for the anti- side, because, well, we're going to be spending a lot more on health insurance.  We're expecting to increase the size of the individual insurance market by something like 50%, and premiums in the market are going to go up.

Talking about the averages necessarily disguises the fact that the costs and benefits will be distributed unevenly.  People without employer-based insurance who have an expensive condition are the big winners.  People who are currently in the private market are probably net losers, because many of them could buy the extra coverage they will be getting, and have chosen not to.  Relatively affluent-but-uninsured people, meanwhile, we see their premiums rise by somewhere between $5800 and $15,200, according to the CBO. 

Of course, many people will not face the full costs of their treatment--slightly more than half of the people in the individual market are expected to receive subsidies.  But that just means that someone else will have to give up those thousands of dollars.  It looks to me like health care spending as a percentage of GDP is going to be higher, not lower, when all the changes are phased in.