A Congressional Budget Office report released yesterday demonstrates that health-care reform will likely result in lower premiums for most consumers, thanks to the combination of new rules for insurance companies and subsidies for low- and middle-income Americans. Though the changes for people in employer-based health insurance plans will be relatively small -- only a few percentage points -- the individual insurance market sees a great increase in value (lower price for a better quality product) and Matt Yglesias rightly points out that this dynamic will improve overall choice in the insurance market. Right now, it's prohibitively expensive for anyone with employer-based health care to get an individual health plan on their own, creating a virtual monopoly, but if individual plans were affordable, competition can be expected to provide salutary effects on the employer-based insurance model over time.Meanwhile, we've already seen evidence that the Senate bill's excise tax on high-cost insurance plans will likely have the result of leading to higher wages for workers -- on average, $700 a year -- as employers seek to rebalance compensation plans between benefits and salary. (Opponents of the tax, including labor unions, dispute this analysis on its face, but I have yet to seen a rigorous economic argument in their favor.)With all of these mechanisms in effect in the final bill -- premiums going down a few percentage points for most people, wages going up a few hundred bucks -- it looks like this bill is going to have a relatively substantial positive effect on most people's wallets. (Sure, it doesn't seem like much, but even small changes can have a big impact.) It's one of the reasons that health-care reform will have a positive impact without a public option, but it will still be hard for Democrats to campaign on because so many of its provisions don't go into effect until 2012. Nonetheless, it is pretty remarkable that after all this work, the bill actually does lower the deficit, does reach near-universal coverage, and it looks like it will save regular people money. Now if they can just pass it ...-- Tim Fernholz
