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 $5,300 in 2016. This is a plan with an “actuarial value” (roughly, the share of expenses for a given population covered by insurance) of 70 percent. In their September 22 letter to the Senate Finance Committee, the CBO projected that, absent reform, the cost of an individual policy in the nongroup market would be $6,000 for a plan with an actuarial value of 60 percent. This implies that the same plan that cost $6,000 without reform would cost $4,540 with reform, or almost 25 percent less.
The CBO has not reported many of the details of their analysis, such as the age distribution of individuals in the nongroup market or in the exchange. So these data do not provide a strictly apples-to-apples comparison of premiums for the same individual in the exchange and in the no-reform, nongroup market. And their conclusion may change as legislation moves forward. But the key point is that, as of now, 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.
Ezra Klein - Massachusetts provides evidence that health-care reform lowers insurance premiums