Are the CBO’s Insurance Premium Projections Too Optimistic?

Conn Carroll / December 01, 2009

Yesterday, Heritage scholar Rea Hederman explained why new CBO estimates showing only small rises in health insurance premiums under Obamacare was not good news for Americans (in short: Americans  with generous coverage would see benefits cut due to the tax on high-value plans and Americans with Spartan coverage would see their premiums increase due to increased coverage mandates and taxes on medical devices and insurers that would be passed on).

Today at NRO, Ethics and Public Policy Center fellow James Capretta explains why even the low premium increases projected by the CBO may be overly optimistic:

For weeks, experts have been warning that the Senate legislation would lead to serious “adverse selection” in the individual and small-group insurance markets. Adverse selection occurs when, on average, the pool of insured lives becomes less healthy over time compared to a relevant comparison group. The Senate bill would require insurers to take all comers, with heavily regulated rates. These rules would help those with chronic conditions get less expensive coverage. But they would also drive up premiums for the young and healthy. (more…)