Will health-insurance premiums go up or down under House and Senate health-care plans?

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Will health-insurance premiums go up or down under House and Senate health-care plans?

It’s difficult to say, and it depends on who you are.

Will the plans “bend the cost curve,” as Democrats so badly want? Maybe, but there’s no easy answer.

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The health-care legislation scheduled for a Senate vote early today is a 2,000-page-plus grab-bag of ideas and strategies, and many senators are as confused about its potential impact as the general public is.

“It has to be complicated,” said Timothy Jost, a law professor at Washington & Lee University in Lexington, Va., because it overhauls a complex system that involves one-sixth of the economy.

However, Jost said, “It’s probably more complicated than it has to be.”

Constituents are puzzled.

“After months of debate over health care, a large majority of Americans — 69 percent — say they find the issue hard to understand, which is slightly higher than in late July (63 percent),” according to a Pew Research Center analysis of its Dec. 9-13 nationwide poll.

President Obama campaigned on a promise to televise health-care negotiations on C-SPAN, but that hasn’t happened. Lawmakers continue to meet privately to make deals, and the president and White House negotiators themselves have weighed in behind closed doors.

White House press secretary Robert Gibbs has defended Obama against accusations that he broke his promise, insisting Obama has kept the public abreast of developments and that he never promised that the entire legislative process would be conducted publicly.

Congressional supporters, meanwhile, are being asked to answer several questions that keep popping up, such as:

Cost of premiums

The compromise Senate plan would restrict how much private insurers could spend on administrative and marketing costs, and that would help lower premiums, the nonpartisan Congressional Budget Office (CBO) said. The bill, however, also bars insurers from imposing lifetime limits on coverage, and that, the agency said, “would tend to raise premiums slightly.”

Linda Blumberg, an economist and a senior fellow at Washington’s nonpartisan Urban Institute, explains the impact of the Senate bill this way:

People buying coverage through small group or private plans could see lower premiums. Administrative costs, according to the Congressional Research Service, run from 30 to 35 percent of benefits paid out. The bill would restrict those costs to 20 percent, and they could end up even lower due to changes in the way coverage would be sold.

But young, healthy people buying such coverage could see rates higher than they might be able to get today, because they would receive no break for their health status and less of a discount for their age, Blumberg said.

Both the House and Senate bills bar insurers from denying coverage or increasing rates because of pre-existing conditions, and limit how much older people can be charged.

Both bills, however, also allow people who like their current coverage to keep it, minimizing the number of people who would experience premium increases. In addition, federal financial help in buying coverage would shield many young purchasers from the full burden of sharing costs with older, less healthy people, she said.

People who buy coverage through large groups would be less affected. Such groups’ administrative costs, limited to 15 percent under the Senate bill, routinely are less than 10 percent now. Those large group purchasers are likely to retain current coverage.

What could affect them most, Blumberg said, is the Senate’s plan to impose a 40 percent excise tax on most employer-sponsored health-care plans that cost more than $8,500 annually for individuals and $23,000 for families. Those amounts will be adjusted each year for inflation.

Employers that now provide such high-cost coverage, she said, could very well change the coverage they now provide, lowering premiums but increasing out-of-pocket costs for medical expenses.

Cost containment

Do the plans really “bend the cost curve”? Yes, but on a bumpy road. The CBO estimates that the Senate measure would reduce federal deficits by approximately $132 billion over 10 years.

But because key provisions of the bill won’t take effect until 2014, and a lot of new taxes will be collected in prior years, the deficit would drop an estimated $124 billion from 2010 to 2015, rise $13 billion in 2016 and 2017, and then drop somewhat in 2018 and 2019, according to the CBO.

The mandates

Does the bill wait too long to implement major changes? The House version requires nearly everyone to have “acceptable health coverage” by the start of 2013, but the Senate version puts that off a year.

“I think 2013 is crazy,” Jost said, partly because it gives politicians time to “chip away” at the system, or eradicate it altogether.

Many House Democrats are troubled by the 2014 effective date because, should a new president less friendly to health-care change be elected in 2012, it would give him or her and the new Congress an entire year to make changes. The effective date is expected to be a major flash point in House-Senate talks.

The bill’s supporters argue that it takes time and money to set up such a complex new system.

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