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Report: House Bill Would Increase Health Care Costs

BY Lea Winerman  November 16, 2009 at 2:09 PM EST

Nancy Pelosi; File photo

Republican lawmakers and other opponents of the bill jumped on the news of the report, which was conducted by the nonpartisan Center for Medicare and Medicaid Services at the request of House Republicans.

The study “confirms that this bill violates President Obama’s promise to ‘bend the cost curve,” House Minority Leader John Boehner, R-Ohio, said in a statement. “It’s now beyond dispute that their bill will raise costs.”

On Sunday, Nancy-Ann DeParle, the head of the White House Office of Health Reform, pushed back against the report in an interview with Politico, calling the analysis “speculative.”

“This is not something [CMS analysts] normally do,” she told the paper. “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.”

Democrats sought to highlight the report’s positive findings, including that the bill would cover 10 percent more Americans while only increasing costs by 1.3 percent, and that it would extend Medicare’s financial solvency by five years, until 2022.

The report also does not include any analysis of the bill’s new taxes, which are intended to raise revenue to pay for reform.

But the report was generally seen as bad news for the Democrats. President Barack Obama and congressional Democrats have said that one of the main goals of health care reform is to slow the growth of overall health care spending, in addition to expanding coverage.

But some lawmakers and analysts have said that the cost-cutting measures in the bill passed by the House — things like prevention programs and reducing Medicare fraud — don’t go far enough.

The CMS report backs up that criticism.

“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,” the analysis reads.

The report also suggests that one of the bill’s main cost-cutting measures, reducing the payments Medicare makes to health care providers, might not be sustainable. That’s because hospitals, nursing homes and other providers might stop taking Medicare patients altogether in favor of more lucrative private health insurance patients, which could force Medicare to raise its reimbursement rates and wipe out much of the planned savings, the report says.

Among the other predictions in the 31-page report is that the roughly 23 million people would remain uninsured in 2019 — 5 million undocumented immigrants and 18 million people who choose to pay a penalty fee rather than buy health insurance.

Read the full report on the Web site of the House Ways and Means Committee’s Republican members.

The report could prove key in shaping the upcoming Senate bill that Majority Leader Harry Reid is aiming to begin debate on as early as this week, and in later negotiations between the House and Senate.

CMS did acknowledge that because so many of the bill’s provisions had never been tried before, the agency’s analysis was “subject to much greater uncertainty than normal.” CMS, a division of the department of Health and Human Services, administers the Medicare and Medicaid programs. The report was issued by Richard Foster, the agency’s chief actuary.