Cut the cost of a typical family's health insurance premium by up to $2,500 a year

CBO: Senate health plan would not cut family premiums as much as Obama promised

Updated: Tuesday, December 1st, 2009 | By Robert Farley

This promise was originally included in our database as part of Promise No. 433, to sign a "universal" health care bill. We decided to break this one out into a separate promise because it became obvious as the health care debate progressed that these were distinct issues, that one could be broken while the other is kept.

Many times during his presidential campaign, Barack Obama cited this $2,500-a-year figure.

And on Nov. 30, 2009, U.S. Rep. Mike Pence, chairman of the House Republican Conference, called him on it.

Pence cited a Congressional Budget Office, or CBO, analysis of how the health care plan proposed by Senate Majority Leader Harry Reid would affect health insurance premiums.

"During last year's campaign, the president promised to deliver health care reform that would lower premiums by $2,500. In light of this new CBO report, I urge the president to call on Democrat leaders to start over or explain to the American people why lowering health care costs isn't a promise worth keeping."

The CBO report, issued Nov. 30, 2009, broke its analysis of effects on premiums into three categories: those in the small group market (generally people who get their insurance through businesses with up to 50 employees), which would make up about 13 percent of the total insurance market; those in the large group market, which would account for about 70 percent of people; and those in the "nongroup market," people who would purchase their insurance as an individual through the government's health insurance "exchange," which may or may not include a public option, and which was projected to grow to about 17 percent of the overall insurance market in 2016.

And here's how the CBO projected the effect of the Senate Democrats' plan on insurance premiums:

• For those in the large group market, 0 to 3 percent lower (with average family premiums going from $20,300 in 2016 under current law to $20,100 under the Reid plan)

• For those in the small group market, anywhere from a 1 percent increase to a 2 percent decrease (with average family premiums going from $19,300 in 2016 under current law to $19,200 under the Reid plan)

• For those in the nongroup market, an increase of 10 to 13 percent (with average family premiums going from $13,100 in 2016 under current law to $15,200 under the Reid plan)

So according to the CBO, the vast majority of working families -- who get their insurance through their employer -- would see a slight decrease in premiums. But only in the neighborhood of $100 to $200 a year, nowhere near $2,500 a year. We note that this is just one plan, and it has not passed Congress, let alone been signed into law by the president. Nonetheless, it is in many ways the "working plan" at the moment. And since the CBO does not project average family premium savings anywhere near what Obama promised, we rate this promise Stalled.

Sources:

Congressional Budget Office, Analysis of how health insurance premiums might be affected by enactment of the Patient Protection and Affordable Care Act, as proposed by Senator Reid on November 18, 2009