Kevin Drum responding to a study by Jonathan Gruber:
There are three important things to note about this. First, the Senate bill lowers average premiums across the board. Second, in addition to this reduction, the Senate bill provides subsidies to low- and middle-income familes that makes health insurance even less expensive. Third, it does this for a plan that covers about 70% of all medical expenses, compare to a non-reform plan that covers only about 60% of all expenses. On an apples-to-apples basis, the Senate bill lowers premiums by about 20% and then subsidizes that lower price to reduce the cost of coverage even more.
I won' bother to dispute the study's finding until I have read it, though it flies in the face of experience in all the individual states who have actually tried this. However, here is a few things even without disputing the study methodology are nearly assured:
1. It is not a cost decrease for those who currently choose not to buy insurance. It is an enormous cost increase. Further, the cost decreases projected in this study are based mainly on the implicit subsidy of young healthy people being forced to purchase a policy whose price is much, much higher than its expected benefit to them, thereby subsidizing the rest of us. Further, this subsidy is enhanced by provisions in the bill that put cost caps on policies for the sick and elderly, thereby increasing the amount the young and healthy pay and therefore increasing the cross-subsidization.
2. It is not a cost decrease if you are like me and have real insurance, by that I mean insurance that covers catastrophes rather than regular maintenance. Those of us with high deductible health plans, which are the smartest plans from a system perspective because it forces us to price-shop and make tradeoffs for routine procedures, will see our costs go up as our plans are banned.
3. Likewise, those of us who have policies that cover a narrower range of things (e.g. no mental care, no aromatherapy, no massage, etc) and happily live in a state that allows such narrower policies will see our prices increase as the Senate bill forces us to pay for coverage we do not want.
In other words, the Senate bill might, sort of, possibly represent somewhat of a price decrease if you currently are insured and you are not young and not healthy and desire exactly the one-size fits all policy that Congress is mandating.
Of course, this assumes that Congress will resist a parade of special interests trying to get their particular procedure or device included in the mandated coverage guidelines. So far, state governments like New York have not been able to resist the blandishments of these folks, causing premium prices to skyrocket, and I see not hope Congress will resist either.
And all this assumes that price caps and various rules Congress puts in place won't drive out the providers in the system. What good is a $100 price cut if I have to spend 20 extra hours a year of my valuable time standing in lines, filling out forms, or trying to find a doctor who will take me on.
Update: More on the numbers here.