This curve (Austin Frakt via Kevin Drum) gave me the heebeegeebees yesterday:
Depending on our positions on that curve, reforms could actually increase costs…and it’s unclear just where we are. Turns out, those fears were (likely) misplaced. Results from Our Beloved Commonwealth (we’ve had the Death Panels up and running for a while now…) seem to imply that, hey presto, this healthcare reform thing can actually drive down costs:
the most authoritative objective voice in this debate suggests that reform will significantly reduce, not increase, nongroup premiums.
This conclusion is consistent with evidence from Massachusetts. In their December 2007 report, AHIP reported that the average single premium at the end of 2006 for a nongroup product in the United States was $2,613. In a report issued just this week, AHIP found that the average single premium in mid-2009 was $2,985, or a 14 percent increase. That same report presents results for the nongroup markets in a set of states. One of those states is Massachusetts, which passed health-care reform similar to the one contemplated at the federal level in mid-2006. The major aspects of this reform took place in 2007, notably the introduction of large subsidies for low-income populations, a merged nongroup and small group insurance market, and a mandate on individuals to purchase health insurance. And the results have been an enormous reduction in the cost of nongroup insurance in the state: The average individual premium in the state fell from $8,537 at the end of 2006 to $5,143 in mid-2009, a 40 percent reduction, while the rest of the nation was seeing a 14 percent increase.
Imagine that. Increasing the pool size, having a mandate, and guaranteeing coverage reduces rates by spreading risk. Will wonders ever cease?
Lemkin 