CBO Decides That Health Care Insurance Is Price Sensitive

Who’d a thunk it? If health care insurance is too expensive, people don’t participate. That’s what the editors of the Washington Post say about the Congressional Budget Office’s findings on the Alexander-Murray compromise:

The Alexander-Murray bill would restore the payments for two years. The CBO predicts that, though the damage has been done for 2018, the bill would restrain premiums and cut government spending in 2019. If the payments were continued beyond that point, the savings would presumably continue, as well.

But the Alexander-Murray plan contains much more, and the CBO’s findings on the bill’s Obamacare reforms are the most illuminating pieces of the new analysis. For example, the bill would allow all people to buy “copper” (as opposed to gold, silver or bronze) health-care plans, which would offer consumers less generous benefits at a lower monthly price. The CBO found that this provision would draw more healthy people into the individual market, lowering average premiums and saving the government $1 billion. Streamlining the process though which states can obtain waivers from Obamacare rules, meanwhile, would spur more state-based experimentation.

The causality goes the opposite direction from what the Reid-Pelosi Congress apparently believed. Lower costs result in more people being insured. More people being insured don’t necessarily result in lower costs.

If we genuinely want people to be able to obtain health care without being penurized by it, the name of the game is cost control. Affordability through subsidy is a sucker’s game. It will inevitably result in the prices rising to absorb any subsidy.