Real change with new view of Man and Reality

Originally, the Baucus bill offered a tradeoff to insurers: Drop policies that deny coverage based on a person's poor health, and in return the government would require that everyone carry insurance, including younger, healthier Americans. But the committee postponed and reduced the penalties on people who refuse to buy coverage. "Without the addition of the millions of young and healthy Americans who now choose to forgo coverage . . . the requirement that insurers insure all comers . . . would actually backfire -- resulting in higher premiums and more instability for the middle class," wrote researchers at the Third Way, a centrist Democratic group. The left-leaning Urban Institute released an analysis projecting that pre-retirement-age people would face average insurance bills above $10,000 because the legislation would allow insurers to charge older customers rates five times as high as those for younger clients.

But Carl McDonald, an analyst at Oppenheimer Equity Research, said the insurers may be worried about the impact of reform on profit margins. Under the proposed system, customers would buy insurance on a regulated, transparent marketplace called an exchange. "If all of the products are standardized, then when you actually get the price quotes, those price quotes are going to actually be comparable," he said. "In that kind of scenario, I don't see how premiums don't come down and put pressure on margins."