The Senate's plan to overhaul the U.S. health insurance system won't have a significant impact on the cost of premiums for employee coverage, according to analysis released Monday by the Congressional Budget Office and the Joint Committee on Taxation. Meanwhile, premiums for the 32 million people in the nongroup market could increase as much as 30 percent due to expanded coverage, but CBO says provisions in the Senate bill will be able to offset the cost to purchasers.

The average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 as compared to current law in that same year, according to CBO. But government subsidies would help with the increased cost for about half those enrollees.

The cost for insurance could be about 60 percent less than if no legislation were enacted.

Furthermore, "that increase would be partially offset by lower costs for insurers, who would have access to a new pool of younger, healthier customers who might previously have gone without insurance," writes Lori Montgomery of The Washington Post.

The result: Nongroup premiums on average would increase by about 13 percent compared with current law, to $5,800 for individuals and $15,200 for family coverage."

According to projections, small- (50 or fewer employees) and large-group (50-plus employees) markets would make up 13 percent and 70 percent of the total insurance market, respectively.

In the small group market, CBO and JCT estimate that the change in the average premium per person resulting from the legislation could range from an increase of 1 percent to a reduction of 2 percent in 2016 (relative to current law). In the large group market, the legislation would yield an average premium per person that is zero to 3 percent lower in 2016 (relative to current law).

The average premium per policy in the small group market would be in the vicinity of $7,800 for single policies and $19,200 for family policies under the proposal, compared with about $7,800 and $19,300 under current law. In the large group market, average premiums would be roughly $7,300 for single policies and $20,100 for family policies under the proposal, compared with about $7,400 and $20,300 under current law.

The CBO says figures obtained do not factor the effects of the small business tax credit on the cost of purchasing insurance. Estimates also don't include the effects of the excise tax on high-premium insurance policies offered through employers.

CBO states only a relatively small share (about 12 percent) of people with coverage in the small group market would benefit from that the small business tax credit in 2016. For those people, the cost of insurance under the proposal would be about 8 percent to 11 percent lower, on average, compared with that cost under current law.

An estimated 19 percent of workers with employment-based coverage would be affected by the excise tax in 2016. Those individuals who kept their high-premium policies would pay a higher premium than under current law, with the difference in premiums roughly equal to the amount of the tax.

However, CBO and JCT estimate that "most people would avoid the cost of the excise tax by enrolling in plans that had lower premiums; those reductions would result from choosing plans that either pay a smaller share of covered health care costs (which would reduce premiums directly as well as indirectly by leading to less use of covered medical services), manage benefits more tightly, or cover fewer services."

On balance, the average premium among the affected workers would be about 9 percent to 12 percent less than under current law, according to CBO.

Instant Insights /

CBO: Employee premiums won&#039;t change much under Senate bill

More From HR Executive

Related Stories

Recommended For You

CBO: Employee premiums won't change much under Senate bill