Senate Healthcare Followup

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I made this point briefly in comments on Monday, but after reading coverage yesterday of the CBO report on the Senate healthcare plan, it probably deserves a quick front page post of its own.

The CBO report says that the average cost of an individual policy will go up under the Senate plan.  (The cost of group coverage goes down slightly.)  However, this is because CBO expects that people will be attracted, on average, to policies that are more generous.  Roughly speaking, CBO expects the average policy to get 30 percent better but cost only about 10 more.  Subsidies will then lower this cost further for most families.

That’s a pretty good deal, and it doesn’t mean that the Senate bill raises the cost of individual health insurance.  It means that people are buying better insurance.  In fact, if you compare similar policies with similar coverage, they cost less under the Senate bill.  This is the comparison that Jonathan Gruber was trying to make in my original post.  He figures that costs will go down about 5%, while the CBO report itself figures 7-10%.

Bottom line: premium costs will go up for some people, but not for most.  And if you choose to buy a policy similar to the one you have today, your cost will almost certainly go down.

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