This may not get the same amount of press attention as the damning–though ultimately flawed–AHIP/PricewaterhouseCoopers report on the impact of reform measures on the price of premiums. But White House officials are already decrying a new insurance company report alleging that health care reform will cause premiums to spike.
BlueCross BlueShield has sent an analysis to members of Congress–along with a letter, which you can read here–that reaches a similar conclusion to the PwC analysis: The provisions of the health care reform proposals on Capitol Hill that BlueCross don’t like will cause people’s premiums to skyrocket.
An administration official scoffed at the findings: “This report isn’t quite as egregious as the AHIP report…if the AHIP report was a $3.50 bill, this one’s a $3.00 bill.”Like the AHIP/PwC report, Blue Cross farmed theirs out to consultants–in this case Oliver Wyman. One of the most damning claims: “We estimate that in most states, premiums for the youngest 30 percent of the population will increase by 69 percent under a 2:1 age band included in the Senate HELP and House Committee bills compared to a 5:1 age band.”
The various reform proposals on the Hill peg the age band at different levels. Basically, the band outlines the degree to which insurers are allowed to increase peoples’ premiums based on age. Under the terms of the House legislation, this ratio would be 2:1 (i.e. an insurer could double the premiums of a 64 year old over those of an 18 year old simply based on age alone). Under the Senate Finance Committee bill, that ratio would be 5:1. The narrower the age band, the more young people will be paying in to the system to subsidize the cost of caring for the middle-aged and elderly.
So it’s true that a narrow age band taken on its own would push up premium prices for younger consumers. But the report does not factor in other considerations, such as the fact that individual insurance plans will be purchased in a competitive exchange, or that the exchange might include a public option, which could drive down premiums even further. (In fact, in its letter, BlueCross urges Congress to “reject” the public option altogether.) And though the report does incorporate the mitigating effect of subsidies when it comes to the impact of a strong vs. weak individual mandate, it does not appear to address the degree to which subsidies will offset the premium increases incurred by narrowing the age band.
A call to Oliver Wyman was not immediately returned.