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Letter to the Honorable Olympia Snowe 1 (January 2010)

handle is hein.congrec/cbo9380 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 January 11, 2010 Honorable Olympia Snowe United States Senate Washington, DC 20510 Dear Senator: In late November, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) released an analysis of average premiums for health insurance under the Patient Protection and Affordable Care Act (PPACA) as introduced.' That analysis compared the estimates of average premiums in 2016 under the proposal to those that would prevail under current law and distinguished the effects among the markets for individually purchased (nongroup) coverage, for small-group coverage, and for large-group coverage. This letter responds to your request for additional information about expected premiums under that proposal for policies that would meet the minimum requirements necessary to avoid paying a penalty for not having insurance. As a rule, individuals would be required to have a policy covering the essential benefits specified in the legislation and having an actuarial value of at least 60 percent in order to avoid such a penalty. (A plan's actuarial value is the share of costs for covered services that it would pay, on average, with a broadly representative group of people enrolled.) That minimum level of coverage is designated as a Bronze plan. Several caveats apply to this analysis of Bronze premiums. First, it draws on the calculations of premiums that were done for the PPACA as originally introduced; as indicated in CBO's cost estimate for the PPACA incorporating the manager's amendment, the effects of the Senate-passed legislation on premiums are likely to be quite similar to those estimates but may not be identical.2 Second, CBO has not analyzed premiums for Bronze 1 Congressional Budget Office,AAnlssoHelhIsrnePmisUdrtePaet Protctin ad Aforabl Cae At,attachment to a letter to the Honorable Evan Bayh (November 30, 2009). 2 Congressional Budget Office,cotetmtfothPainPrtconndAodblCrec, incrpoatig te anaer' amndmnt(December 19, 2009). www.cbo.gov

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