estimate. Thus, the amount that subsidized enrollees would pay for nongroup
coverage would be roughly 56 percent to 59 percent lower, on average, than the
nongroup premiums charged under current law. Among nongroup enrollees who
would not receive new subsidies, average premiums would increase by somewhat
less than the 10 percent to 13 percent difference for the nongroup market as a
whole because some factors discussed below would have different effects for
those enrollees than for those receiving subsidies.
The amount of subsidy received would depend on the enrollee’s income relative
to the federal poverty level (FPL) according to a specified schedule (see Table 2,
appended).
5
The legislation would have much smaller effects on premiums for employment-
based coverage, which would account for about five-sixths of the total health
insurance market. In the small group market, which is defined in this analysis as
consisting of employers with 50 or fewer workers, CBO and JCT estimate that the
change in the average premium per person resulting from the legislation could
range from an increase of 1 percent to a reduction of 2 percent in 2016 (relative to
current law).
Under the proposal, the subsidy levels in each market would be tied
to the premium of the second cheapest plan providing the “silver” level of
coverage (that is, paying 70 percent of enrollees’ covered health care costs, on
average). CBO and JCT have estimated that, in 2016, the average premium
nationwide for those “reference plans” would be about $5,200 for single coverage
and about $14,100 for family coverage. The difference between those figures and
the average nongroup premiums under the proposal that are cited above ($5,800
and $15,200, respectively) reflects the expectation that many people would opt for
a plan that was more expensive than the reference plan, to obtain either a higher
amount of coverage or other valued features (such as a broader network of
providers or less tightly managed benefits).
Employment-Based Coverage
6
In the large group market, which is defined here as consisting of
employers with more than 50 workers, the legislation would yield an average
premium per person that is zero to 3 percent lower in 2016 (relative to current
law). Those overall effects reflect the net impact of many relatively small
changes, some of which would tend to increase premiums and some of which
would tend to reduce them (as shown in Table 1).
7
5
Table 2 reproduces the table included in Congressional Budget Office,
letter to the Honorable
Harry Reid providing an analysis of subsidies and payments at different income levels under the
Patient Protection and Affordable Care Act (November 20, 2009).
6
Under the proposal, the small group market in 2016 would be defined to include firms with 100
or fewer employees, but the threshold for the exemption from the penalties imposed on employers
would be set at 50 full-time employees. Because the proposal would have similar effects on
premiums for large and small employers, reclassifying firms with 51 to 100 workers as small
employers for purposes of this analysis would probably have little effect on the overall results,
though the factors affecting premiums for those firms would be somewhat different.
7
Because the aggregate amount of premiums for employment-based plans is large, even small
percentage changes can have noticeable effects on the federal budget through their effects on the
amount of compensation excluded from taxation because of the tax preference that applies to those
premiums.