Report: Health Bill Will Help Uninsured, But Raise Costs, Hurt Seniors' Choices

A report by the Centers for Medicare and Medicaid Services sent Democratic staffers scrambling over the weekend after the 31-page study revealed potentially damaging findings about the cost and coverage of the health care bill passed by the House of Representatives Saturday night. The report said, among other things, that rather than cutting costs, the bill would increase them by $289 billion over 10 years and could jeopardize coverage to seniors because of Medicare cuts.

The report also undercuts promises by President Obama and top Democrats that health care reform would not add to the already ballooning federal deficit.

CMS is a division of the Department of Health and Human Services, but calls itself "an independent technical adviser to both the Administration and Congress." The report, ordered by the top Republican on the Ways and Means Committee, comes as Senate Majority Leader Harry Reid waits for a cost analysis from the Congressional Budget Office on his version of health care legislation and as the question of the cost of reform becomes the highest-profile do-or-die issue in the debate. Several moderate Democrats, including Sens. Blanche Lincoln and Ben Nelson, have openly worried about the spiraling costs of reform on the federal budget.

Nancy-Ann DeParle, a senior White House adviser for health care, called the report "speculative," telling Politico Sunday, "It is an interesting analysis, but it is pretty speculative though of what the impact will be on providers and beneficiaries. Our recent experience would indicate something quite different." On Monday, DeParle posted a separate study from the Business Round Table which, she wrote on the White House blog, "confirms Congress is moving in the right direction on both fiscal responsibility and cost containment." The study was conducted by Hewitt Associates, a human resources consulting firm that has publicly advocated for a public option and other elements of the House-passed bill.

In good news for the Democrats, the analysis from CMS's chief actuary, Richard Foster, found that the House bill will achieve its primary goal of significantly helping uninsured Americans by providing new access to affordable health insurance. However, Foster also warns that the expansion will come at a cost to the federal deficit, which will likely increase, and to seniors, who could lose access to some of their own doctors under the plan as cuts to Medicare force some providers out of the market.

President Obama promised during his September address to the Joint Session of Congress that health care reform would "add not one dime to the deficit." House Speaker Nancy repeated that promise word-for-word just before the House passed health care reform by a two-vote margin.

Rep. Dave Camp, the leading Republican on Ways and Means, requested the CMS study and released it on Saturday, calling it "a stark warning to every Republican, Democrat and Independent worried about the financial future of this nation.'' Camp said, "This report confirms what virtually every independent expert has been saying: Speaker Pelosi's health care bill will increase costs, not decrease them."

Specifically, the report finds that:

* The bill will expand coverage to 34 million Americans by 2019, increasing coverage from 83 percent to 93 percent of all Americans.

* Rather than reducing health care costs for the federal government, the report says the bill would increase the federal share of health care costs by $289 billion over ten years, and increase the projected percentage of health spending from 20.8 percent in 2019 (under current law) to 21.1 percent of GDP if the bill passes.

* Premiums in the public option will be 4 percent higher than private insurance premiums because the pool in the public option would have a higher risk of illness.

* While some employers will offer insurance for the first time, because of new access to insurance plans, other small employers will drop coverage because paying a penalty to the government will be less expensive than actually offering coverage to their employees. CMS predicts a small net increase in employer coverage.

* For seniors, the report says that planned cuts to Medicare reimbursements could force some doctors not to take Medicare patients. "Providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and might end their participation in the program (possibly jeopardizing access to care for beneficiaries."

* And finally, CMS stressed that there is a great degree of uncertainty in its predictions because of the unpredictability of employers and individuals.