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CBO: Health Reform Reduces Premiums Across the Board

A new CBO report commissioned by Senator Evan Bayh was released today, and the findings suggest that an overwhelming majority of individuals would pay less for insurance premiums under the reform proposals. Below are the major findings:

Large Group Market
(70% of population)
Up to a 3% reduction in average premium cost

Small Group Market
(13% of population)
Up to a 2% reduction in average premiums PLUS 9% reduction from subsidies through Exchange totaling 11% average reduction in premium cost

Nongroup Market (17% of population)
Up to a 13% increase in average premiums PLUS 72% reduction from subsidies through Exchange totaling 59% reduction in average premium cost

These estimates are based on the assumptions that:
-A broader scope of benefits would INCREASE nongroup premiums
-A greater actuarial value would INCREASE nongroup premiums
-New market rules would REDUCE administrative costs
-Increased competition would slightly REDUCE premiums in nongroup market (and the presence of a public plan option would further reduce premiums)
-New fees would slightly INCREASE premiums
-Cost shifting effects would be MINIMAL as reduction in uncompensated care to uninsured (as a result of coverage expansion) would be offset by increase in Medicaid enrollment
-Excise tax would effect 19% of policies, REDUCING premiums by 9-12%

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