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CBO: Health Bill Would Increase Employer-Based Coverage

5013485A government agency released a letter Sunday explaining that, contrary to Republican criticisms, the House Democrats' proposed health care legislation would increase the number of citizens who receive health insurance through their employers.

The results of the Congressional Budget Office's preliminary analysis were detailed in a letter to Rep. Dave Camp, the ranking Republican of the House Ways and Means Committee, after Republicans sought additional information about about the effects the bill would have on private versus public insurance enrollment, the effects on private-sector premiums, and other issues.

Conservatives have charged that the creation of a government-sponsored health insurance option, or "public plan," would result in many Americans losing their current, employer-based coverage. The CBO's analysis concludes that by 2016, about 9 million people who would otherwise have had employer-based coverage would not be enrolled in an employment-based plan under the House plan. However, about 12 million people who currently are not offered employer-based coverage would receive it, resulting in a net increase of 3 million Americans with employer-provided care.

Firms would have incentive to provide coverage for their employers, the CBO concludes, since they would face penalties for not doing so. Furthermore, they would likely have to offer higher wages and other forms of compensation for employees, anyway, to keep up in a competitive labor market.

"Indeed, workers might be particularly motivated to demand such increases under the proposal because they would be required to obtain insurance," the CBO letter says.

On top of that, since workers currently do not pay income or payroll taxes on employer-provided insurance, any compensation to make up for a lack of insurance would have to cover the additional cost of taxes.

The letter indicates the CBO is uncertain of the impact the bill will have on premiums, but it lists some factors that could decrease costs. For instance, the average cost of covering enrollees could drop, since Americans would presumably be healthier as a result of having greater access to care.