U.S. Health Agency Predicts Higher Costs Than Obama Promised
Republican opponents of the new health reform overhaul legislation must be dancing in the streets now as a new government report suggests what they have argued all along — that health care costs will increase with seniors on Medicare taking the biggest hit.
A so-called panel of impartial economic experts at the Health and Human Services Department said the billions of dollars cut in Medicare, in particular, may be unrealistic and unsustainable. It also said the legislation will achieve President Obama’s goal of adding 34 million Americans to health insurance coverage.
White House officials repeatedly claim such analyses have been too pessimistic, low-balling the law’s potential savings.
The bad news coincided with a Congressional Budget Office revised estimate that 4 million Americans will be penalized for not buying health insurance as mandated in the law beginning in 2014.. This section of the overhaul legislation is being challenged in court by 13 states.
The Health and Human Services report carried a disclaimer from the Medicare’s Office of the Actuary claiming the analysis does not represent the official view of the Obama administration.
The report said most of the red ink will be sustained in the first decade because taxes on so-called Cadillac coverage by high income earners won’t take effect until 2018.
“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.” Foster’s office is responsible for long-range costs estimates.
Rep. Dave Camp (R-Michigan) said the increased costs were expected all along and that the Medicare cuts will undermine coverage for seniors and require higher premiums. Other Republicans charged during the 15-month debate that health coverage for seniors would be rationed.
The health care law, passed by a divided Congress after bitter partisan debate, would create new health insurance markets for individuals and small businesses. Starting in 2014, most Americans would be required to carry health insurance except in cases of financial hardship. Tax credits would help many middle-class households pay their premiums, while Medicaid would pick up more low-income people. Insurers would be required to accept all applicants, regardless of their health.
In effect, the report indicated Obama’s goal of near universal coverage being offset by cost-savings reforms missed the mark by $311 billion between 2010 and 2019. Translated into total health care spending during the decade, the amount surpasses $35 trillion.
The U.S. spends $2.5 trillion a year on health care now, far more per person than any other developed nation, and for results that aren’t clearly better when compared to more frugal countries.
White House officials argue the increase is a bargain price for guaranteeing coverage to 95% of Americans.
The report, contained on the Health and Human Services website, adds:
In addition to flagging the cuts to hospitals, nursing homes and other providers as potentially unsustainable, it projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular program. Enrollment would plummet by about 50 percent, as the plans reduce extra benefits that they currently offer. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.
This report and an anticipated more to follow as the 2,400-page health reform law is dissected, adds ammunition to the arsenal Republicans plan to attack Democrats in the midterm elections. No Republican Congressman voted for the bill on the political gamble it would fail — even if it was passed. Depending on the wording, few polls reflect voters view the law favorably. Despite the front loading of good features — such as preventing insurance companies from dropping patients with preexisting conditions — the full impact of the law will not be realized for at least five years and definitely not by the midterm elections just six months from now.
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