CMS report: House bill will raise health care costs, affect seniors' benefits

Nov 16 2009

A new report from the Centers for Medicare and Medicaid Services finds that the health overhaul bill passed by the House will raise health costs by approximately $289 billion in the next ten years.  The report was requested by House Republicans and compiled by CMS' chief actuary, Richard Foster.

The Washington Post: "A plan to slash more than $500 billion from future Medicare spending -- one of the biggest sources of funding for President Obama's proposed overhaul of the nation's health-care system -- would sharply reduce benefits for some senior citizens and could jeopardize access to care for millions of others, according to a government evaluation released Saturday. The report, requested by House Republicans, found that Medicare cuts contained in the health package approved by the House on Nov. 7 are likely to prove so costly to hospitals and nursing homes that they could stop taking Medicare altogether."

"Democrats focused Saturday on the positive aspects of the report, noting that Foster concludes that overall national spending on health care would increase by a little more than 1 percent over the next decade, even though millions of additional people would gain insurance. Out-of-pocket spending would decline more than $200 billion by 2019, with the government picking up much of that. The Medicare savings, if they materialized, would extend the life of that program by five years, meaning it would not begin to require cash infusions until 2022." (Montgomery, 11/15).

The Hill: "CMS's analysis is not an apples-to-apples comparison to the cost estimate conducted by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) because CMS did not review tax provisions, which help offset the price tag of the Democrats' measure. However, the CMS analysis clearly states that the House bill falls short in attaining a key goal of the Democrats' effort to reform the nation's healthcare system: 'With the exception of the proposed reduction in Medicare... the provisions of H.R. 3962 would not have a significant impact on future healthcare cost growth rates.'"

"Minority Leader John Boehner (R-Ohio) highlighted the report on Saturday in a written statement. 'This report once again discredits Democrats' assertions that their $1.3 trillion government takeover of health care will lower costs, and it confirms that this bill violates President Obama's promise to "bend the cost curve." It's now beyond dispute that their bill will raise costs, which is exactly what the American people don't want.' ... CMS's findings are not binding on Congress, however. Congress must abide by CBO and JCT estimates. The Hill has a copy of the full report (Hooper, 11/14).

The Associated Press: "Overall spending on health care would rise as a result of legislation approved a week ago by the House, and billions of dollars in projected savings contained in the measure will be difficult to maintain, according to a report by a top official at the agency that oversees Medicare. The legislation would expand insurance coverage to an estimated 32 million people who now lack it, according to the report, creating a demand for services that 'could be difficult to meet initially ... and could lead to price-increases, cost-shifting and/or changes in providers' willingness to treat patients with low-reimbursement health coverage'" (Espo, 11/14).

Politico analyzed some of the the report's statements: "Pg. 3 - 'Most of the provisions of H.R. 3962 that were designed, in part, to reduce the rate of growth in health care costs would have a relatively small savings impact.' Translation: Things like wellness and prevention programs and reducing Medicare fraud don't save much money."

"Pg. 9 - Over the next decade, the report estimates 'a relatively small reduction in non-Medicare federal health care expenditures of $2.1 billion, all of which is associated with the comparative effectiveness research provision.' ... Pg 16 - 'The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, changes in providers' willingness to treat patients with low-reimbursement health coverage." Translation: A crush of newly insured patients could be a shock to the system'" (Frates, 11/14).

In a second story, Politico reports on White House reaction to the report. "Nancy-Ann DeParle, director of the White House Office of Health Reform, pushed back Sunday on the CMS report that concluded Medicare beneficiaries could lose access to health care providers under the House bill. ...'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'" (Budoff Brown, 11/15).