A Blow to Health Reform? CMS Sees Cost Problems With Bill

By Jennifer Parker

Dec 11, 2009 5:13pm

ABC News' Z. Byron Wolf reports: CMS, the independent administrator of Medicare, is out with a new cost assessment of the Senate health bill today and it estimates that, rather than lowering the bottom line of government health spending, the bill would increase government obligations by $234 billion over ten years – 0.7 percent.  “It is one of the most serious indictments of the entire philosophy” behind the Democrats and President Obama’s bill, according to Sen. John McCain at a Capitol Hill press conference this afternoon. Perhaps the main argument Democrats have been using to argue for health reform is that it will “bend the cost curve.” And the bill will extend the life of Medicare by 5 years. And to that point, the report estimates that the bill will extend the solvency of Medicare’s hospital trust fund by 9 years  It also finds that costs for individuals on Medicare would fall, perhaps as much as $700 per year for a couple on Medicare. That does not mean a rosy scenario, however, for hospitals serving Medicare patients. The report estimates that that 20 percent of those hospitals would become unprofitable by 2019. This could be disastrous especially in rural states, where there are fewer hospitals. The report, written by CMS Chief Actuary Robert Foster, also reasserts questions about whether the CLASS act – a new long-term home-care provision in the bill, would be viable after 2019. Granted, the CMS report comes with the caveat that its numbers are produced with “a substantially greater degree of uncertainty than is usually the case with more routine health care proposals.”
“The legislation would result in numerous changes in the way that health care insurance is provided and paid for in the US, and the scope and magnitude of these changes are such that few precedents exist for use in estimation,” according to Foster. The bill would reduce the number of uninsured in 2019 from more than 56 million Americans to around 23 million Americans. 20 million more people would find themselves on Medicaid under the bill – from about 83 percent of Americans covered to 93 percent. And the report suggests that a tax that would be imposed on insurers providing high-cost coverage plans would have a significant impact on health care costs. Democrats countered that the CMS report was actually good news. Democrats argued in a paper statement that in the last year of the CMS cost estimate, the spending growth slows under the Democrats’ bill and that slowing would continue after 2019. “There is a lot of great news in the report released today by the CMS actuary,” said Sen. Max Baucus, D-Mont. “This report is yet another independent, non-partisan analysis making clear health reform will extend the life of Medicare for nearly a decade and reduce premiums and cost-sharing for Medicare beneficiaries by nearly $500 per couple annually.  Also, the report shows that health reform will ensure both the federal government and the American people spend less on health care than if this bill doesn’t pass, helping get a hold of America’s debt and keep more money in people’s pockets.  This report is yet another clear indicator that we have to act – and act now.”   

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