PricewaterhouseCoopers issued a puzzling statement today about the report they were commissioned to write by AHIP, the health insurance lobby, which showed through some questionable assumptions that insurance premiums would rise faster in the event of health care reform than from doing nothing. The statement could be essentially boiled down to, “don’t look at us!”
America’s Health Insurance Plans engaged PricewaterhouseCoopers to prepare a report that focused on four components of the Senate Finance Committee proposal:
Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.
An excise tax on employer-sponsored high value health plans.
Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers.
New taxes on health sector entities.
The analysis concluded that collectively the four provisions would raise premiums for private health insurance coverage. As the report itself acknowledges, other provisions that are part of health reform proposals were not included in the PwC analysis. The report stated on page 1:
“The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated.”
In other words, AHIP made them do it and they didn’t look at any mitigating factors. That’s a pretty definitive backpedal, although you wonder, if this comes out 24 hours after the release of the report, why they took the obvious headache of a job in the first place. This adds to the notion that the AHIP report backfired to an astonishing degree.
Meanwhile, reform supporter and health care expert Jonathan Gruber from MIT posted his own analysis stating that the Finance Committee proposal would lower non-group premiums:
Sizeable premium savings for young. An individual aged 25 at $19,000 in income (175% of poverty) would benefit from tax credits and would save, on average, $685. A higher income young person could always buy a “bronze” plan without tax credits for a savings of $230. Moreover, they could qualify for a catastrophic policy – also known as a “young invincible” policy. This policy would cost on average only $1190, saving them $585 at all income levels.
Even larger premium savings for older individuals. A person age 60 with income at $19,000 (175% of poverty) would save, on average, $7890. A person at age 60 with income at $40,600 (375% of poverty) would continue to benefit from tax credits and would save, on average, $4100. Even at a high enough income level to not benefit from tax credits, older persons purchasing a bronze plan would save about $2800.
• Also large premium savings for a family. A family with income at $38,000 (175% of poverty) would save, on average, $8550. That same family with higher income could buy a “bronze” plan without tax credits at a savings of $2430 over current non-group prices.
Gruber doesn’t reveal his modeling, and he doesn’t totally grapple with the effect of a weakened individual mandate, but at least he doesn’t openly distance himself from his own analysis. And presumably, a bill with a public option included would have the potential to lower these premiums even more.