Jonathan Gruber of MIT is out with a new report today, proving once again that health reform – this time the Senate version in particular – would save people money. And once again, he’s relying on CBO numbers to prove the point. Here’s the argument:
In a letter to Senator Reid on November 20, the Congressional Budget Office (the official government scoring agency) reported that they estimated the cost of an individual low-cost plan in the exchange to be $5200 in 2016. This is a plan with an "actuarial value" (roughly, the share of expenses for a given population covered by insurance) of 70%. In their most recent communication with Congress, CBO also projected that, absent reform, the cost of an individual policy in the non-group market would be $5500 for a plan with an actuarial value of 60%. This implies that the same plan that cost $5500 without reform would cost $4460 with reform, or almost 20% less.
Gruber goes on to chart some of the savings for people:
It’s worth noting that the premium savings – calculated between $200 and $400 – are before the subsidies are applied. When the subsidies are factored in, you can see how significant the savings are, especially at lower incomes.
The Senate bill – with exchanges, a public health insurance option, and generous subsidies for lower incomes – would indeed save people a good chunk of change. Of course, there are parts that can and should be improved – better affordability standards for all Americans, for example – but critics who take the insurance industry line and say reform will increase costs are dead wrong.
(also posted at the NOW! blog)
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12 Comments







And Ryan Grim at HuffPost reports that, according to the CBO, health insurers [sic] would also save money. Specifically, they would save the money they now spend on trying to figure out creative ways to deny coverage to people.
Sounds like a win-win to me. Except, of course, for those claims-deniers who could end up losing their jobs, as so many others (whose claims may have been denied) already have.
I’m sure we can put even those claims deniers to work (if that’s even a job, but hey, you never know) insuring all the new people who are currently uninsured.
They might require a new skill set, but, hey, that’s what re-training programs are for. ;~)
Subsidies aren’t savings, they’re incentives.
I’m not sure how they’re not savings. If my health care costs go down, I’m saving money.
You individually, but it’s temporary (as the subsidy becomes expected, it ends up in the price), and that money got put into the system somewhere; if not by you. Congratulations to you for “saving” $200, but somebody spent that $200, because the system is still broken.
I don’t know how to be any more clear about this, subsidies are anathema to cost reduction, they do the opposite. They might be plausibly characterized as harm reduction, but they’re not cost reduction. The full sticker price was still paid.
Also, in addition to the above conditions being still missing from every CBO analysis, remember this little problem?:
We don’t have any idea what selection assumptions were made.
i have a long comment which i can’t post without getting a db error, so i’m going to try to post it in several parts if this short comment goes through…..
part 1:
for crying out loud, gruber is an idiot.
the “new” cbo report (11/20) was a correction to the previous one (11/06 — which i actually read). because there was an error in calculating the CLASS provision. nothing else was changed.
http://cboblog.cbo.gov/?p=428
http://www.cbo.gov/ftpdocs/107xx/doc10741/hr3962Revised.pdf
part 2:
gruber’s “new” report is almost word for word the same as his previously, thoroughly discredited report that uses 1) cbo data in a way they expressly say it shouldn’t be used and 2) an ahip (insurance industry lobbyists) report on MA (which i know from personal experience of living in MA is wrong).
here are the two main bits that have changed (i encourage readers to take a look at the two reports if you have any doubts about my characterization of “almost word for word the same):
“old” gruber report (link at bottom):
“new” gruber report:
now, maybe there is something new in this “most recent communication with Congress” from the CBO, but since gruber doesn’t give a link, a date, or a footnote or a reference of any kind, i don’t actually know what communication he’s referring to. if i did, i’d be happy to read it too in case there is anything new i’ve missed.
part 3 (and final):
re previously, thoroughly discredited, see these threads:
http://seminal.firedoglake.com/diary/14424#comment-96581
http://seminal.firedoglake.com/diary/12857
http://seminal.firedoglake.com/diary/12620
…….
finally, i haven’t seen any analysis that breaks down total national health expenditures for component sectors (fed, state and local gov, employer, household at various income levels), so i’m not making any claims other than to say it’s been show here previously multiple times that gruber’s report is fatally flawed.
CBO report yesterday confirmed a lot of what Gruber was saying. So whatever you say, selise…
have you read the report? and if so would you quote the relevant bits that support your assertion?
i haven’t read the report yet, although i intend to do so. before i do, just to make sure we’re talking about the same report, is it the one jon blogged about yesterday, CBO: Senate Bill Would Have Basically No Effect On Most Americans’ Insurance Premiums?