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Gruber: Reform Will Lower Premiums, At Least for Some

For the last twenty-four hours or so, analysts and experts have been poking holes in the new study, commissioned by and for the insurance industry, purporting to show that health care reform would raise insurance premiums. But now one of the experts everybody (myself included) has quoted has put together a quick memo showing that, at least for people trying to buy coverage through the new exchanges, premiums would actually come down. Way down.

The expert is MIT economist Jonathan Gruber. He hasn't formally modeled the impacts of the reforms on premiums; for this analysis, he has relied simply on available data from the Congressional Budget Office. But the gist of what he says makes sense intuitively. (As you can imagine, I'm not exactly qualified to pass judgment on the figures.)

And while Gruber has advised both the administration and its allies on reform--the White House is circulating this paper--he's also worked with Republicans and has credibility on both sides of the aisle. His work, in other words, a wee bit more reliable than what the insurance industry put out over the weekend.

Here's the key passage in his paper:

The Senate Finance Committee proposal includes health insurance and delivery system reforms, new options, premium assistance, and other proposals to improve quality, affordable health care for all Americans through state-based exchanges.  The premiums that individuals will face in these exchanges are, according to the non-partisan Congressional Budget Office, considerably lower than what they would face in the existing non-group insurance market, due to the market reforms put in place by the SFC plan and the market economies of new exchanges.  ...

...for those facing purchase in the non-group market, the SFC bill will deliver savings ranging from several hundred dollars for the youngest consumers to over $8500 for families.  This is in addition to all the other benefits that this legislation will deliver to those consumers--in particular the guarantee, unavailable in most states, that prices would not be raised or the policy revoked if they became ill.

The full memo, complete with slides, is here.

Of course, there's still one important question that needs answering: How will reform affect preimums for employer-sponsored insurance? That is the way most working people get insurance now. It's also the way most people will get insurance in the future, even if reform passes.

Stay tuned...