CBO: Public Option Premiums Pricier Than Private Insuance in House Plan

2 years ago

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Patricia Murphy

Capitol Hill Bureau Chief

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We've already thrown 2,000 pages of health care bill reading at you today, but we want to call your attention to one important paragraph in the Congressional Budget Office's analysis of the House Democrats' plan that was unveiled Thursday.

Here is the CBO analysis of premiums under the House plan (our emphasis added):

That estimate of enrollment reflects CBO's assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges.

The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that "adverse selection" on the public plan's premiums would be only partially offset by the "risk adjustment" procedures that would apply to all plans operating in the exchanges.)

Translation: Because the public option would likely attract a less healthy population, such as people with pre-existing conditions, the higher costs would be spread across all enrollees in the government-run plan, making premiums somewhat more expensive. While some people would have to pay full fare to get the public option, others would be subsidized by the government to make their premiums more affordable.

Also, the public option may not be more expensive than private insurance in the Senate bill. We haven't seen that CBO estimate yet, but we'll keep you posted.

Filed Under: Senate, House, Democrats, Health Care, The Capitolist

Tagged: daily guidance, DailyGuidance, health care reform, HealthCareReform, heatlh care, HeatlhCare

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