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Did the Congressional Budget Office find that premiums costs will go down?

Lamar Alexander and Barack Obama just had a contentious exchange on this point, so it's worth settling the issue: Yes, the CBO found health-care reform would reduce premiums. The issue gets confused because it also found that access to subsidies would encourage people to buy more comprehensive insurance, which would mean that the value of their insurance would be higher after reform than before it. But that's not the same as insurance becoming more expensive: The fact that I could buy a nicer car after getting a better job suggests that cars are becoming pricier. The bottom line is that if you're comparing two plans that are exactly the same, costs go down after reform.

You can find a full rundown of the report here.

By Ezra Klein  |  February 25, 2010; 11:17 AM ET
 
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Next: Sen. Lamar Alexander explains why there'll be no compromise

Comments

"But that's not the same as insurance becoming more expensive: The fact that I could buy a nicer car after getting a better job suggests that cars are becoming pricier."

Don't you mean, "doesn't suggest"?

Posted by: agowen100 | February 25, 2010 11:23 AM | Report abuse

This is a red herring....cutting taxes has NO COST associated with it....


Let me ask you this: How much would it cost for yourlocal pizza place to lower their cost on a slice of pizza by 50 cents?

What if more slices of pizza are sold at the lower cost----can you argue that cutting the cost LOST money, if profits increased?

You guys either don't understand the bigger picture or you are intentionally deceiving the public to pass a horrible progressive agenda that will destroy the USA!

Posted by: FastEddieO007 | February 25, 2010 11:24 AM | Report abuse

"The bottom line is that if you're comparing two plans that are exactly the same, costs go down after reform."

What matters is whether the cheaper package is still available. If the previously minimal plan no longer meets the new minimum standard, then a person with minimal needs will see the price of meeting those needs go *up*.

Forcing someone to buy insurance he doesn't need, and calling it a better value, is not proof that his costs haven't gone up.

Posted by: cpurick | February 25, 2010 11:33 AM | Report abuse

Eddie - Cutting taxes would have no costs if there were offsetting cuts in spending. That is NOT what we get from Republicans. The GOP loves to give tax cuts to the Paris Hilton's of the world and put it on the American credit card. Guess what, we have to pay that money back.

Don't believe me? Look at the national debt from Reagan's first term on.

Posted by: nisleib | February 25, 2010 11:33 AM | Report abuse

Here's how much the Bush Tax Cuts cost!:

http://online.wsj.com/public/article_print/SB114670305012743294.html


When you spend money to feed the goose that lays the golden egg(our capitalist economy) the cost is actually a benefit! The economy grows and delivers more money at the lower rate!!!

You Democrats don't understand that the private sector can create more jobs if the government lets it keep more of its profits! That's been the secret to the American Success story over the last 200+ years!!! Wake up!!

Posted by: FastEddieO007 | February 25, 2010 11:39 AM | Report abuse

The Congressional Budget Office also found that, in the future, manking will be ruled by machine, so we should all prepare to hail our robot overlords. Also, we'll all have flying cars. Which we will only fly in service to our robot overlords.

I'm sorry, but: "The issue gets confused because it also found that access to subsidies would encourage people to buy more comprehensive insurance, which would mean that the value of their insurance would be higher after reform than before it"?

That's taking a lot on faith. There is no remotely accurate way to score that kind of behavioral shift except with extremely wide margins of error. Why even bother with the CBO? Just use a Magic Eight Ball, or a box of fortune cookies.

Posted by: Kevin_Willis | February 25, 2010 11:39 AM | Report abuse

@nisleib: "Cutting taxes would have no costs if there were offsetting cuts in spending."

Actually, all you would have to do to pay for tax cuts, and fairly quickly, is reduce the rate of growth of spending (instead of letting it increase 6% a year, cut it down to a 2% increase per year) and avoid new spending.

"Don't believe me? Look at the national debt from Reagan's first term on."

Actually, Reagan submitted balanced budgets--on most years if not all of them. None of the budgets he signed were balanced, because Democrats restored entitlement spending and added new spending (not Reagan) and, if he wanted to get his tax cuts and his increases in defense spending, he had to go along with it. In the end, Reagan compromised in order to get his priorities, but he submitted balanced budgets.

Dubya, on the other hand, did not submit a single balanced budget that I'm aware of. But Dubya was a "big government" conservative, and conservatives would do well to remember that "big government" conservatives are effectively little different from big government liberals when it comes to spending--except that they often end up spending more, and growing the government more, than those big government liberals we're so afraid of.

However, at least they (the so-called big government conservatives) cut taxes. That's a positive. And demonstrates that Democrats would never lose another election again if they would actually cut taxes (instead of pretending to cut taxes, saying they're going to cut taxes, or offering mythical middle-class "tax relief" that doesn't actually, you know, cut taxes). If they'd try the "We're going to give you healthcare, and cut your taxes, cuz we're totally awesome" approach, they'd win election after election. Until it caught up with them.

Posted by: Kevin_Willis | February 25, 2010 11:47 AM | Report abuse

listening to paul ryan.
listening to mitch mcconnell talking about distribution of minutes.
watching cantor.


sending barack obama light and blessings, as he tries to respond.
he is a model of how a human being should act with grace, goodwill, patience and restraint when being pushed to the limits.
how an intelligent person can be compassionate and humble, even when being interrogated by those who are less intelligent, and know less than he does.
it is beyond admirable.

Posted by: jkaren | February 25, 2010 11:48 AM | Report abuse

Kevin - Didn't the national debt triple under Reagan? I get that you want to blame Democrats for that, and I'm not saying they are blameless, but the President holds veto power. The President is, well, the President. The buck stops, well, you know.

Posted by: nisleib | February 25, 2010 11:55 AM | Report abuse

@nisleib: "I get that you want to blame Democrats for that, and I'm not saying they are blameless, but the President holds veto power."

This is true. However, I understand why he didn't veto the budget and re-submit--because he was not going to get a budget that spent less. Chances were, if he vetoed the budget, resubmitted his balanced budget, and got one back from the Democrats loaded with pork, it would be more expensive than the one before. There are time pressures--he could not keep vetoing the budget. So, he chose a debt-busting budget over losing his tax cuts and increased defense spending.

However, he did submit balanced budgets. Dubya didn't even do that. Didn't even try. And then signed 'em with all the extra porky goodness.

Look, Clinton was a good steward of the budget. He was up against many of the same things Reagan was, and did a good job of keeping the budget at a reasonable level of growth. Bush did not. Worse than Clinton, Bush, Sr., or Reagan. However, Obama is shaping up to be the biggest deficit spender in the history of our country, in real and as a portion of GDP terms.

Whatever budgetary mistakes Reagan and Dubya made, it's an odd argument to make that Obama is doing something smart by doubling down on the deficit spending of previous Republican administrations.

Posted by: Kevin_Willis | February 25, 2010 12:09 PM | Report abuse

You Democrats don't understand that the private sector can create more jobs if the government lets it keep more of its profits!
Posted by: FastEddieO007 | February 25, 2010 11:39 AM

------------------------------

Indeed, they "can." In practice, however, they don't. When government lets business keep more of its profits, business generally pockets the money.

Posted by: js_edit | February 25, 2010 12:10 PM | Report abuse

I heard the opening comments by the Pres. and Alexander. As part of his comments, Alexander said (in effect as I heard it) that unless the Dems renounced their right to reconciliation there would be no sense in continuing. I saw it as a direct challenge which would need to be answered by the end of the opening statements. That apparently hasn't happened.

Did I miss something?

Posted by: joemken | February 25, 2010 12:12 PM | Report abuse

yes and access to subsides further insulates a FAR TOO insulated public from the true cost of care. You're making a bad problem worse.

Sending great blessings to Douglas Elmendorf to explain that to these jokers on both sides of the aisle.

Why is he not here? or is he and i just missed him??

Posted by: visionbrkr | February 25, 2010 12:13 PM | Report abuse

Kevin,

CBO data indicates 4/5 of the current deficit is due to Bush policies and laws in place at the time Obama was elected.

Obama inherited a titanic heading toward an iceberg.

He has stated he desires to change course. So your prognostications that he will be the biggest debt creator of all time is worthless at this time.

Obama has already tried to make cuts in the defense budget and medicare and has tried to involve bipartisan support of a deficit commission.

Obama is the first person since Clinton indicating he wants to control deficits (he did not cause or create). Obama and Clinton are the only two President since Carter wanting to balance the budget and making sounds/actions to fulfil that desire. That's why so many keynaesian advocates hate Obama, because he has been unwilling to spend lots of money to get out of the recession.

Posted by: Lomillialor | February 25, 2010 12:21 PM | Report abuse

Ezra- This post is not completely honest. Cpurick is correct above.

If the new rules forbid you to purchase the same plan as you did before and instead forcec you to buy a more expensive plan then premiums have gone up. Reform is likely to remove some low cost options from the market. Some people are likely to be forced to pay more. You should not ignore this issue.

Posted by: mbp3 | February 25, 2010 12:24 PM | Report abuse

The problem is that, just like some humans are murderers, some businesses are also criminal and engage in predatory practices.

People like FastEddie are either ideologues or idiots not to admit it. Quite often they are either greedy scrooges or racists who care nothing except to win control of gvmt.

Posted by: Lomillialor | February 25, 2010 12:24 PM | Report abuse

Kevin - You misunderstand me. I didn't say, "it's an odd argument to make that Obama is doing something smart by doubling down on the deficit spending of previous Republican administrations."

I'm not making that case. I approach tax cuts as a CPA. Can they be benefitial to the economy? Sure, but if they are not offset by spending cuts a large part (most) of those tax cuts go straight onto the national debt. If you look at American history you will find I am correct.

Tax cuts, in my opinion, have become the Underwear Gnomes of the American econcomy. 1) Cut taxes 2) ? 3) Profit!

Posted by: nisleib | February 25, 2010 12:26 PM | Report abuse

js_edit:
"When government lets business keep more of its profits, business generally pockets the money."

What does "pockets" mean? Are they putting it in Mason jars? Why don't you list the things a company might do to "pocket" its profits? Then we can explore whether those activities really don't create jobs.

Posted by: cpurick | February 25, 2010 12:28 PM | Report abuse

Eddie,

Trickle-down economics failed. Tax breaks to employers who then then ship jobs out of the country to tap into savings on wage labor is a double-whammy on the nation's economy. When will you people realize Reagan and his re-distribution of wealth from poor and middle-class to the uber-rich was the beginning of the end of this country. Unless you're a CEO and are getting the benefits of corporate welfare, or you're a chump, siding with your biggest enemy.

Posted by: pennyhutchinson | February 25, 2010 12:50 PM | Report abuse

"But that's not the same as insurance becoming more expensive: The fact that I could buy a nicer car after getting a better job suggests that cars are becoming pricier."

Cost to who? If you want to buy a nicer car after getting a job, more power to you. But if I am willing to subsidize you to get a Hyundai, but I am forced to subsidize your purchase of a Cadillac, my costs certainly go up.

Posted by: bgmma50 | February 25, 2010 1:01 PM | Report abuse

If you ignore the cost of paying higher taxes and the higher premiums outside of the individual market and every example of increased regulation on premiums in State markets.......and the need for more subsidies and more taxes over time to combat the upward pressure on healthcare costs that is only made worse through this legislation.

Posted by: fallsmeadjc | February 25, 2010 1:15 PM | Report abuse

Good point, Mr. Klein.

I'm afraid, however, that the subtlety is lost on Alexander. Today's GOP does not deal in subtlety.

Posted by: Gatsby10 | February 25, 2010 1:23 PM | Report abuse

Using the Apples and Oranges terminology of the President in conjunction with the figures he cited from the CBO, my understanding is as follows.

Before HCR:
1. An Apple costs $0.50.
2. An Orange costs $1.00.
3. Most people buy Apples.

After HCR:
1. The cost of an Orange might (or might not) drop to $0.80.
2. Those who have Apples may keep them until they rot.
3. No new Apples can be purchased.

Since most people buy Apples and will be forced to buy Oranges, these people
will perceive a cost increase of $0.30 to $0.50, even though the price of Apples has
not changed and the price of Oranges has potentially gone down.

Everyone just needs to be comfortable with the extra $0.30 to $0.50, which results from the potential reduction in cost of oranges, which in turn results from the required purchase of oranges.

Posted by: rmgregory | February 25, 2010 2:09 PM | Report abuse

"Lamar Alexander and Barack Obama just had a contentious exchange on this point, so it's worth settling the issue: Yes, the CBO found health-care reform would reduce premiums."

Except the CBO didn't score the latest version of Obamacare, so Klein saying that the CBO said Obama's plan would reduce premiums is completely unfounded.

Posted by: steve_tsouloufis | February 25, 2010 2:22 PM | Report abuse

IIRC, the report suggests that employer-based plan premiums would be slightly higher than without legislation.

Posted by: wisewon | February 25, 2010 3:04 PM | Report abuse

"FastEddieO007 wrote: You Democrats don't understand that the private sector can create more jobs if the government lets it keep more of its profits! That's been the secret to the American Success story over the last 200+ years!!! Wake up!!"
-------
That may have been true before companies started to ship the jobs overseas. It is not the case anymore.

Why anyone would defend the Healthcare oligopoly is beyond belief. In one example, a major healthcare company had an 18% increase in profits, gave their top exec a $1M bonus, increased salaries for their top managers by 26%, then asked for a 39% rate hike for premiums in California. They don't care about their customers.

Posted by: jgmann | February 25, 2010 4:04 PM | Report abuse

if the republican trickle down economics worked so well, why is America close to finicial destruction? Bush & co. with their tax cuts, has gotten a few millionares much richer, but then of course who has to subsidize the wars Bush & the neocons endorsed, in fact planned for. How can the reps. every debate, over fiscal responsibility, after the debacels they introduced the previous 8yrs.? trying to debate the right-wing over healthcare is laughable.

Posted by: hitch78 | February 25, 2010 4:47 PM | Report abuse

jgmann - you say "Why anyone would defend the Healthcare oligopoly is beyond belief. In one example, a major healthcare company had an 18% increase in profits, gave their top exec a $1M bonus, increased salaries for their top managers by 26%, then asked for a 39% rate hike for premiums in California. They don't care about their customers."


A % increase in profits is a meaningless statistic...overall private insurance profit MARGIN is still a puny 2%. Most businesses in America operate at profit margins way above that, especially law firms which open lawsuit factories going after ever healthcare service provider trying to gain a quick million dollar award if that provider forgot to dot their i......Trial Lawyers Malpractice awards are as big as insurance company profits, and trial lawyers make MORE profit by keeping healthcare dysfunctional. Insurance Providers make more money the more efficient healthcare works, and as a result re-invest much of their profits back into improving healthcare!

Posted by: FastEddieO007 | February 26, 2010 12:12 AM | Report abuse

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