The new document arms Democrats with an economical response to the contention of Senate Minority Leader Mitch McConnell. MIT analysis backs Obama health plan

A new analysis by a leading MIT economist provides new ammunition for Democrats as the Senate begins formally debating the historic health-reform bill being pushed by President Barack Obama.

The report concludes that under the Senate’s health-reform bill, Americans buying individual coverage will pay less than they do for today's typical individual market coverage, and would be protected from high out-of-pocket costs.


So Democrats will argue that under the Senate bill, Americans would pay less for more.

The new document arms Democrats with a response to the contention of Senate Minority Leader Mitch McConnell (R-Ky.) that the bill would mean “higher premiums, higher taxes, and massive cuts to Medicare.”

The “microsimulation” analysis is by Jonathan Gruber, an economist at the Massachusetts Institute of Technology and a Treasury Department official under President Bill Clinton. Gruber used data from the Congressional Budget Office.

Gruber concludes that people purchasing individual insurance would save an annual $200 (singles) to $500 (families) in 2009 dollars. And people with low incomes would receive premium tax credits that would reduce the price that they pay for health insurance by as much as $2,500 to $7,500.

The report will be circulated to Capitol Hill this week. Read the four-page report here.

Gruber’s conclusion: “[F]or those facing purchase in the non-group market, the … bill will deliver savings ranging from $200 for singles to $500 for families in today’s dollars – even without subsidies. The savings are much larger for lower income populations that receive premium credits.

“This is in addition to the higher quality benefits that those in the exchange will receive, with actuarial values for low income populations well above what is typical in the non-group market today. It is also in addition to all the other benefits that this legislation will deliver to those consumers – in particular the guarantee, unavailable in most states, that prices would not be raised or the policy revoked if they became ill.”

Gruber was among the 23 Ph.D. economists who sent a letter to Obama on Nov. 17 endorsing his approach to health-care reform. Read the economists’ four-page letter here.

Read McConnell’s Republican case here.