CBO Says Higher Premiums Under Senate Public Option, ‘Opt-Out’ Clause Would Impact One-Third Of Consumers

November 18, 2009 7:37 p.m.

The CBO has posted its first analysis of the Senate’s health care bill, which you can access

As advertised, the bill reduces the deficit considerably in both the near- and long-term, while expanding coverage to 94 percent of Americans. By 2019, 25 million people would be buying insurance through a health insurance exchange.

However, it’s not all roses. For instance, based on an assessment of the political popularity of the public option, the CBO has concluded that enough states will “opt out” to prevent a full third of consumers from purchasing government insurance.“CBO’s analysis took into account the probability that some states would opt not to allow the public plan to be offered to their residents. Rather than trying to judge which states might opt out, CBO applied a probability recognizing that public opinion is divided regarding the desirability of a public plan and that some states might have difficulty enacting legislation to opt out. Overall, CBO’s assessment was that about two-thirds of the population would be expected to have a public plan available in their state.”

That means that enrollment in the public option would be lower under the terms of the Senate bill than under the terms of the House bill. “CBO estimates, meaning that total enrollment in that plan would be 3 million to 4 million,” compared to six million under House legislation.

And just as in the House bill, the public option would cover more medical services, and attract a sicker risk pool, leading it to charge slightly more on average for premiums than private insurers. “CBO’s assessment is that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that were somewhat higher than the average premiums for the private plans in the exchanges.”

There’s certainly more in the report, and I’ll bring you more key details throughout the day.

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