TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

The New York Times’ headline for the CBO premiums report is “No Big Cost Rise in U.S. Premiums Is Seen in Study,” but the CBO actually reports that:

Under the legislation, it said, the average premium per person in the individual insurance market would be 10 percent to 13 percent higher than under current law. But, it said, most people in this market — 18 million of the 32 million people buying insurance on their own — would qualify for federal subsidies, which would reduce their costs well below what they would have to pay under current law.

The only reason that premiums in the individual insurance market will be reduced under the bill is because of the new subsidies provided. In other words, the bill raises the costs of premiums for individuals, and then masks it with taxpayer (and borrowed) money. The cost is still fundamentally the same — it is just being shifted to other people.

And speaking of shifting…

“In general,” it said, “the proposal would tend to increase premiums for people who are young and relatively healthy, and decrease premiums for those who are older and relatively unhealthy.”

That’s due to community rating, which puts an upper limit on how much more insurance companies can charge the old (who need relatively more care) than the young (who need relatively little care). The effect is premiums rise for the young, so costs on the older are less.