Budget Chief: Health Care Bills Bad for Economy

In a devastating blow to the Obama administration's efforts to pass health care reform, the director of the Congressional Budget Office testified yesterday that the health care reform bills moving through the House and Senate will not reduce the cost of health care and are so expensive for the federal government they will actually weaken the economy.

Doug Elmendorf told the Senate Budget Committee that if Congress does nothing to curb the current cost of health care and increase federal revenues, budget deficits will "cause substantial harm to the economy."

However, he said, the health care reform bills moving through Congress would do the opposite. "And on the contrary, the legislation significantly expands the federal responsibility for health care costs." He went on to say that the increase in federal spending would worsen federal deficits and weaken the overall economy.

When the committee chairman, Sen. Kent Conrad (D-N.D.), asked if the reforms being considered by Congress would at least "bend the curve," or reduce overall health care costs, Elmendorf said, "The curve is being raised."

A key way to raise revenue to pay for health care costs, he said, would be treating employee health care benefits as income and taxing them accordingly.

Although the White House has endorsed raising taxes on high income earners, Obama has refused to consider taxing health benefits. When when asked about Elmendorf's tax idea, Senate Majority Leader Harry Reid suggested that Elmendorf ought to try running for Congress sometime.

A piece of good news for the administration came late yesterday when the American Medical Association endorsed the House version of the bill, writing in a letter to the president, "We are committed to passing health reform this year consistent with principles of pluralism, freedom of choice, freedom of practice, and universal access for patients."