Medicare actuary: Health costs would rise after overhaul

Dec 15 2009

The Senate's health overhaul plan would cover 33 million more people but fail to curb rising health costs, could threaten some Medicare patients' access to care, and may sink profits for one-fifth of hospitals and nursing homes, according to news accounts of an HHS report released Friday afternoon.

The Associated Press: "A new report from government economic analysts at the Health and Human Services Department found that the nation's $2.5 trillion annual health care tab won't shrink under the Democratic blueprint that senators are debating. Instead, it would grow somewhat more rapidly than if Congress does nothing." The AP continues, "More troubling was the report's assessment that the Democrats' plan to squeeze Medicare for $493 billion over 10 years in savings relies on specific policy changes that 'may be unrealistic' and could lead to cuts in services."

"The actuaries' analysis of the Senate bill echoes their previously released reports about the House bill" (Alonso-Zaldivar, 12/12).

The Washington Post: The report, by Rick Foster, chief actuary at the Centers for Medicare and Medicaid Services, concluded that plans "to reduce payments to hospitals and other providers, to force them to adopt more efficient practices, could prove particularly problematic for institutions that serve large numbers of Medicare patients." Those institutions could stop treating Medicare patients - in Foster's words - "possibly jeopardizing access to care for beneficiaries." As many as one in five may no longer be profitable within 10 years (Montgomery, 12/12).

The Wall Street Journal: "The report said 33 million more U.S. citizens and legal residents would be insured under the bill, resulting in 93% of Americans with health-insurance coverage. But it said the new demand for health care caused by the bill could prove 'difficult to meet initially' because doctors and hospitals would charge higher fees in response to the new demand. The report also said proposed cuts in Medicare spending 'may be unrealistic'" (Yoest, 12/11). 

Bloomberg: "Republicans seized on the study, saying it shows the Democrats aren't fulfilling a pledge to slow spending growth. Democrats dismissed the criticism, saying the report shows the bill would strengthen Medicare and cut costs in the long term."  Bloomberg adds, "Several features in the bill, including proposed reductions in Medicare payments, an independent Medicare advisory board to reduce spending growth rates and taxes on the most-expensive insurance plans, 'would have a significant downward impact on future health-care cost growth rates,' the report said." However, the cost of expanding coverage would initially outweigh those savings (Dodge, 12/11).