CMS report on House health bill: Many more insured means more, not less, spending

Nov 16 2009

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.'"

"The analysis was issued by Richard Foster, the chief actuary at the Centers for Medicare and Medicaid, which is part of the Health and Human Services Department. The study was conducted at the request of House Republicans, who quickly tried to turn it against the Obama administration. ... But Brendan Daly, a spokesman for House Speaker Nancy Pelosi, D-Calif., said the report 'shows that our health reform bill will extend the life of the Medicare trust fund by five years, significantly longer than any proposal in recent years'" (Espo, 11/14).

The Hill: "The CMS report is a blow to the White House and House Democrats who have vowed that healthcare reform would curb the growth of healthcare spending. 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" (Hooper, 11/14).

The Hill has a copy of the Centers for Medicare and Medicaid's full report.

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).