Report: Spending Will Soar Under Obamacare

Friday, 11 Dec 2009 02:03 PM

 

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WASHINGTON – Democrats trying to push President Barack Obama's health care overhaul plan through the Senate got a sober warning Friday that costs will keep going up and proposed Medicare savings may harm the program.

A new report from government economic analysts at the Health and Human Services Department found that the nation's $2.5 trillion annual health care tab won't shrink under the Democratic blueprint that senators are debating. Instead, it would grow somewhat more rapidly than if Congress does nothing.

More troubling was the report's assessment that the Democrats' plan to squeeze Medicare for $493 billion over 10 years in savings relies on specific policy changes that "may be unrealistic" and could lead to cuts in services. The Medicare savings are expected to cover about half the nearly $1 trillion, 10-year cost of expanding coverage to the uninsured.

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In still more bad news, the report starkly warned that a new long-term care insurance plan included in the legislation could "face a significant risk of failure" because it would attract people in poor health, leading to higher and higher premiums, and eventually triggering an "insurance death spiral."

The one bright note: The bill would provide coverage to 93 percent of Americans, reducing the number of uninsured people by about 33 million, the report said.

The analysis from the Office of the Actuary, which does long-range cost estimates for Medicare, was prefaced by a disclaimer saying it does not represent the official position of the Obama administration. Unlike estimates from the Congressional Budget Office, which have mainly focused on the legislation's impact on the federal deficit, the actuaries looked at total public and private costs over the next 10 years.

The analysts also used their years of experience with Medicare's finances to make a judgment call on whether the cuts proposed in the Democratic bills are politically sustainable. When previous Congresses have cut Medicare too deeply, providers have usually convinced lawmakers in subsequent years to restore at least some of the money. That same scenario is playing out this year as doctors try to persuade Congress to permanently repeal automatic spending cuts that would reduce their Medicare fees 21 percent next year.

The actuaries' analysis of the Senate bill echoes their previously released reports about the House bill. It addresses core provisions of both bills, and is unlikely to be affected by the latest changes Senate Democrats are proposing.

Republicans seized on the report as validation of their concerns that the overhaul bill is both unaffordable and unrealistic.

"This report confirms what we've long known — the Democrat plan will increase costs, raise premiums, and slash Medicare. That's not reform. This analysis speaks for itself. This bill is a sham," said Senate Republican Leader Mitch McConnell of Kentucky.

Democrats have sought to deflect the criticism by playing up the conclusions of the budget office, which show the bills would reduce the federal deficit and are not likely to drive up premiums for most people with job based coverage.

The actuaries' report projected that national health care spending would rise by an additional 0.7 percent under the bill from 2010-2019, mainly because newly insured people would be able to receive medical care they wouldn't otherwise have gotten.

In response, White House health care spokeswoman Linda Douglass emphasized the report's finding that "reform will have 'a significant downward impact on future health care cost growth rates.' As savings from reform kick in, national health expenditures are projected to increase at a slower annual rate under the Senate bill than under the status quo."

The findings on Medicare are a bigger problem for Democrats. The report suggests the Democratic plan hit the brakes too hard trying to hold down the growth of payments to hospitals, nursing homes, home health agencies and other service providers. And that could reduce access for seniors.

"Providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable," the report said. "Absent legislative intervention, (they) might end their participation in the program, possibly jeopardizing access to care for beneficiaries."

If the cuts stay in place, about one-in-five hospitals, nursing homes, and home care agencies could find themselves going in the red, the report said.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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