HOUSE BILL RAISES, NOT LOWERS, HEALTH CARE COSTS

October 23, 2009

The Chief Actuary in the Centers for Medicare and Medicaid Services in the Obama Health and Human Services (HHS) department issued a memorandum this week looking at the potential impact of the House health reform legislation (H.R. 3200).  As the Associated Press and other media outlets have been reporting, the study shows that the legislation would, as President Obama promised, bend the health care cost curve… but in the wrong direction.

The findings suggest that if the House legislation were enacted, President Obama would be breaking his long standing promise that reform would reduce rapidly growing health care costs, says the Heritage Foundation.  Although the President has continually argued that Americans spend too much on health care, and that under reform they would spend less, the new HHS report finds the opposite is likely to occur under the House legislation.  Here are some key findings from the HHS memorandum:

  • The legislation would increase total national health expenditures in the United States by about 2.1 percent during the period between 2010 and 2019.
  • As a share of gross domestic product (GDP) health care spending would grow to 21.3 percent compared to 20.8 estimated under current law.
  • The bill carries a price tag of about $1 trillion dollars (from 2013 to 2019), which does not even represent a full 10-year cost estimate.
  • The measure is likely to deliver only small savings despite the many provisions intended to reduce the growth in health care costs.
  • While the proposal might cover 34 million uninsured it would still leave 23 million people without coverage, including as many as 18 million Americans who would remain uninsured and face a new tax penalty.

Also:

  • More than 50 percent of the new coverage gains under the bill (18 million out of 34 million) would come from expansions in the Medicaid program.
  • Some 40 percent of those obtaining coverage through a newly established health insurance exchange could be enrolled in the public option.
  • Cuts to the popular Medicare Advantage program for seniors could have the effect of reducing enrollment by 64 percent, with projected enrollment in 2014 falling from 13.2 million to only 4.7 million seniors.
  • All told, the plan puts new strains on health care providers which could lead to price increases, increased cost-shifting onto the privately insured, and/or compromised access to high quality care.

Source: Greg D'Angelo, "House Bill Raises, Not Lowers, Health Care Costs," Heritage Foundation, October 22, 2009.

For text:

http://blog.heritage.org/2009/10/22/house-bill-raises-not-lowers-health-care-costs/

 

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