Key Issues in Analyzing Major Heath Insurance Proposals

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Abstract:

Concerns about the number of people who lack health insurance and about the high
and rising costs of health insurance and health care have led to proposals that would substantially
modify the health insurance system in this country. Because the Medicare program
already provides nearly universal coverage to the elderly, those proposals generally focus on
options for providing coverage to and reducing costs for the nonelderly population. Because
most nonelderly people obtain their insurance coverage through an employer, proposals could
affect that coverage in some way. They could, for example, provide new federal subsidies to
pay some portion of health insurance premiums; impose mandates for individuals to purchase
coverage or for employers to offer it; encourage alternatives to employment-based insurance or
provide strong incentives to purchase coverage individually; or create new federally administered
options for obtaining health insurance (including a single-payer system in which all citizens
or residents would be offered coverage under Medicare).
This report describes some of the key assumptions that the Congressional Budget Office
(CBO) would use in estimating the effects of key elements of such proposals on federal costs,
insurance coverage, and other outcomes; the evidence on which those assumptions are based;
and—if the evidence points to a range of possible effects rather than a precise prediction—
the factors that would influence where a proposal falls within those ranges. In doing so, it also
reviews many of the major issues that arise in designing such proposals. This document does
not provide a comprehensive analysis of any specific proposal; rather, it identifies and discusses
many of the critical factors that would affect estimates of various proposals. In accordance
with CBO’s mandate to provide objective and impartial analysis, the report makes no
recommendations.