Analysis and Reports

During the height of the health care reform debate, several well respected independent groups analyzed the effect of reform on lowering health care costs, expanding coverage, and making coverage more affordable. A highly anticipated report came from the Congressional Budget Office (CBO) in November, which provided a “score” for each bill. This score estimates how much the bills will cost over 10 years, whether and how the bills plan to pay for these costs, and whether they will reduce federal deficits, among other things. Legislators rely on CBO reports to determine if the bills meet their intended fiscal goals.

Two other well-respected independent organizations, PriceWaterhouseCoopers and Oliver Wyman Inc., analyzed the legislation to determine how they will affect health insurance premiums and health care costs.

A report from PriceWaterhouseCoopers issued in October explained that several major provisions in the Senate Finance Committee proposal will cause health care costs to increase far faster and higher than they would under the current system. For example, it estimates that the cost of private health insurance coverage will increase 26 percent between 2009 and 2013 under the current system and by 40 percent during this same period if key provisions of the current legislation are implemented.

Oliver Wyman Inc. studied the affect of the Patient Protection and Affordable Care Act on costs and premiums. In its December 3 report, the health care consulting firm found the following:

• Without a strong federal mandate that individuals must buy health insurance, average annual medical claims in the individual market five years after reform are expected to be 50 percent higher compared to today. Nationally, this would translate into premium increases of approximately $1,500 for single coverage for a year and $3,300 for family coverage.
• Young, healthier people are very price sensitive and are least likely to enter the insurance market without a strong mandate. The current penalty in the Senate bill for not getting insurance is only $95/year for an individual beginning in 2014.
• The minimum benefits that the current legislation requires be included in health plans will increase costs by 10 percent for individuals and 3 percent for small employers.
• Premiums for the youngest 30 percent of the population will increase by 69 percent under the 2:1 age band included in the House bill. This means that premiums for older people can’t be more than twice what they are for younger individuals. That small ratio would not create a wide enough difference in premiums to keep rates low enough for younger people, yet sufficient to cover older, sicker people.  

Read the full reports.

Oliver Wyman Inc.

Department of Health and Human Services
Statement and fact sheet on the benefits of health insurance reform on businesses (12/03/09)

Congressional Budget Office

• Analysis of the Senate bill (11/30/09)

• Analysis of House bill (11/20/2009)

PricewaterhouseCoopers
Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage (10/09)