Senate Healthcare Bill a Mixed Bag for Consumers

Americans pay a lot for health insurance, and the costs are soaring. In 1998, the average premium for an individual was $2,200. Now it's more than twice that, and rising fast.

Politicians know that premiums matter, especially back home, because they can hit constituent wallets hard. But figuring out whether the Senate's healthcare bill will actually keep those costs from rising so quickly is turning out to be even trickier than thought.

Just in time for Senate debate, which is expected to last through the end of the year, the Congressional Budget Office last week issued a report outlining its take on whether the bill would keep premiums in check.

It basically said three things: that there is "considerable uncertainty" with its estimates; that most people who get insurance from an employer probably won't see much change in premiums, for good or bad; and, perhaps most important, that most people who buy insurance on their own, without an employer's help, will end up paying less (although some will have to pay more, depending upon income).

Indiana Sen. Evan Bayh, a centrist Democrat who requested the report, seemed placated. "This report," he said, "alleviates a major concern that has been raised—that insurance costs will go up across the board as a result of this legislation."

Policy experts say the report speaks to an even bigger issue: how the health insurance market will change in the future. "Some people might be very disappointed that the result is not bigger, that we are not really bringing way down the cost of healthcare," says Deborah Chollet, a senior fellow at the nonpartisan Mathematica Policy Research. "In truth, it's taken nearly a century to bring this system up, so you really can't take it apart overnight."

But changes are coming. As the CBO report notes, the biggest shake-up to the status quo will come in what's called the "nongroup market." Right now, this is a frightening, murky place occupied by people who are unemployed or aren't covered by their employer. If the Senate bill passes, the CBO says that by 2016 about 17 percent of Americans will be in this category, up from about 9 percent today, because many will go from being uninsured to the nongroup market. At the moment, people who buy insurance this way, as individuals, usually have very little power to fight for a good deal with an insurer.

The Senate bill, as well as the House bill, would change that. "It'd be a completely new market where people will get better coverage," says Gary Claxton, a director at the nonprofit Kaiser Family Foundation.

The legislation would force insurers to cover a whole basket of services, including preventive screenings, and require them to offer insurance to anyone who asks for it. "That's a very big change," says Chollet. "I know I am going to get an offer when I come in, and if I am going in sick or well, I am going to get an offer at the same price. That is absolutely not what we find now."

Here's how the CBO came to its conclusion: Because insurers would have to offer full insurance packages with standard benefits rather than just bits and pieces, the average cost of insurance, in theory, would go up. Most of the people in the nongroup market, however, will qualify for new subsidies, so the CBO found that about 57 percent will pay less than they would have had to without the legislation. The remainder would see a modest increase. But they would also be getting more coverage.

• See photos of healthcare town hall meetings.