Opinion: Health Care Reform's Lowered Expectations

John Merline

Posted: 12/1/09

Dec. 1) -- Perhaps it's a sign of how far health care reform has drifted off course. Or of how worried Democrats are about getting health care reform passed.

How else to explain the Senate leadership's joyful response to a Congressional Budget Office report that finds that their reform plan will do little to lower insurance costs for millions of Americans, will raise premiums for millions more, and will cut costs for others only through heavy government subsidies?

That's not exactly what the public was promised when the health care reform train got rolling.

Consider: When President Barack Obama was campaigning last year, he rightly focused on the rising burden of health care costs. As he put it then: "Skyrocketing health care costs are making it increasingly difficult for employers, particularly small businesses, to provide health insurance to their employees."

And he made a very clear promise to voters: Elect me, and I will cut your premiums by $2,500.

"If you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year," he said.

So what did the CBO find in its review of the Senate plan?

By 2016, employees in small firms (fewer than 50 workers) could actually see their premiums climb 1 percent higher if the Senate reform bill is enacted than if it isn't. At best, the CBO figures, they could see premiums that are 2 percent lower than they would be without reform.

Employees of large companies, meanwhile, would either see no effect, or a slight 3 percent drop in premiums in 2016 compared with no reform.

But keep in mind that already sky-high employee premiums are set to climb rapidly for the next several years. A recent Commonwealth Fund study says they will nearly double by 2020 without reform. So, at best, the Senate plan would make a very small dent in a very large premium increase.

And individual buyers, who already have the hardest time getting affordable coverage, could see premiums climb as much as 13 percent higher as a result of the reform – mainly because of new insurance regulations and government-mandated benefits. About half (18 million) would be spared these extra costs because of new federal subsidies included in the plan.

As Urban Institute scholars noted here Monday, one problem with both the Senate and House reform plans is the lack of an aggressive public option that would inject meaningful competition and lower premiums. But the bigger problem appears to be a lack of concentrated focus on what reformers used to call "bending the cost curve." Now it's considered a success that reform won't cause "insurance costs [to] go up across the board as a result of this legislation," as Sen. Evan Bayh, D-Ind., put it.

Admittedly, cost cutting is far more politically challenging than extending new government benefits. But with insurance premiums already too high and rising fast, why should the public be expected to celebrate a plan that fails to provide meaningful relief to so many?