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July 17, 2009 at 08:00 PM
Proposed health care reform legislation would not only fail to reduce federal budget deficits but would probably increase them significantly, the Congressional Budget Office projects.
Ultimately, the proposals being advanced by various congressional committees could add $100 billion a year to the federal budget, Douglas Elmendorf, CBO director, said Thursday in congressional testimony.
Elmendorf also said that depending on cuts in payments to the Medicare Advantage program to finance reform would not significantly reduce deficits.
For example, the largest savings proposed in the President’s budget would arise from a decrease in payments to private health insurance plans in the Medicare Advantage program, projected as $157 billion over 10 years through the bill approved by the House Ways and Means Committee Thursday, Elendorf said.
“If enacted, that change would permanently lower the level of Medicare spending, but it would probably not offset a noticeably larger share of the cost of an expansion of insurance coverage in the second 10 years than in the first,” he said.
Moreover, any savings in existing federal programs that were used to finance a significant expansion of health insurance would not be available to reduce future budget deficits. In light of the current path of the federal budget, using savings to finance new programs instead of reducing the deficit would call for even stronger actions in other areas of the budget, Elmendorf said.
One reason for the huge costs of reform is that supporters of health care reform are broadly overstating the savings from providing healthcare coverage for the uninsured, largely through hospitals, he said.
“Uncompensated care is less significant than many people assume,” he said in written testimony to the Senate Budget Committee.
He cited one study that showed hospitals provided about $35 billion in uncompensated care nationwide in 2008–less than 2% of national health expenditures. Estimated costs of unpaid care for other providers are much smaller, he said.
In addition, most expansions of insurance coverage that are under consideration would leave a moderate number of people uninsured, in part because some people would be ineligible for subsidies or would choose not to buy insurance, even with large subsidies.
“Therefore, any current problems arising from the lack of insurance could be reduced but not eliminated,” he testified.
