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Letter to the Honorable Edward M. Kennedy 1 (May 2006)

handle is hein.congrec/cbo9288 and id is 1 raw text is: CONGRESSIONAL BUDGT OFFICE U .S. Congress ashington, DC 20515 May 9, 2006 Honorable Edward M. Kennedy Ranking Member Committee on Health, Education, Labor, and Pensions United States Senate Washington, DC 20510 Dear Senator: This letter responds to your questions regarding the analysis underlying the Congressional Budget Office's (CBO's) cost estimate for S. 1955, the Health Insurance Marketplace Modernization and Affordability Act. In fiscal year 2011, when CBO expects the full effect of the proposed legislation would be realized, we estimate that the small group health insurance market (which consists of firms with 50 or fewer employees) will include about 10.5 million single policyholders and 7.4 million family policyholders. (The family policies will cover an additional 12.5 million dependents, for a total of about 30 million covered individuals in the small group market.) CBO estimates that premiums also would be affected for about 6 million people in firms with slightly more than 50 employees. As discussed in CBO's cost estimate, S. 1955 would lower the average premium while increasing the variation in premiums for small group health insurance. For that part of the insurance market affected by the bill, CBO estimates that about three-quarters of people covered by single or famly policies (27 million in 2011) would face a decrease in premiums under the bill, and one quarter (9 million) would face an increase in premiums (relative to what they would pay under current law). For single policyholders in the small group market who face a decrease in premiums in 2011, CBO estimates that the average decrease would be about $480 annually, or 8 percent. For those who face an increase in premiums, the average increase would be about $520, or 6 percent. (The average premium under current law for policyholders experiencing a decrease in premiums is lower than that for policyholders likely to experience an increase in premiums.)

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