A new version of health care reform legislation in the Senate expands coverage to more Americans yet doesn’t add to the nation’s already burdensome deficit.
It sounds like a workable solution, but is it too good to be true?
This summer the Congressional Budget Office said the primary health care reform effort would add $1 trillion to the deficit over the next decade. Yet the draft bill in the Senate Finance Committee, as yet unencumbered by amendments, appears to not only meet President Barack Obama’s primary requirements on coverage, but the CBO also says it would reduce budget deficits by $81 billion over the next decade.
Feeling vindicated, the White House Office of Management and Budget director, Peter Orszag, told The New York Times the CBO analysis shows reform is possible “while being fiscally responsible.”
That’s good news. But the trick for Congress now will be to keep its members disciplined enough to ensure the savings remain a component of the reform legislation as it moves forward.
We do have other concerns with the legislation. It isn’t clear whether the reforms would slow the rapid rise of health care costs.
And the mechanisms Congress is pushing to pay for the expanded coverage could increase costs for taxpayers and for those already covered by health insurance plans.
To help those who cannot afford health insurance buy it, Medicaid would expand by $345 billion over the next 10 years. And state Medicaid spending would swell by $33 billion. Federal subsidies to help middle-income and low-income earners would cost $461 billion.
Like many states, added Medicaid costs would be a difficult burden for Colorado, which is facing enormous budget shortfalls.
The plan would add a 40 percent tax to high-cost insurance plans — the so-called Cadillac plans — to raise $201 billion. It also would charge fees to insurance companies, drug makers, medical-device manufacturers and other cogs in the health-care machine that critics say would be passed on to consumers.
And it would cut Medicare by targeting the highly popular Medicare Advantage private programs by $117 billion, and reducing reimbursements to medical providers by $162 billion.
This bill doesn’t provide a public option. Instead it includes a plan for cooperatives that would compete with insurers. House Speaker Nancy Pelosi says there will be a public option included in any plans coming from that chamber.
The health insurance cooperatives are meant to compete with private insurers to bring down costs, but here the CBO warns the competition will be spotty at best as the co-ops won’t create “a significant market presence in many areas.”
For health reform to really work, it must at least slow the spiraling rate of medical inflation.
While providing access to coverage to all Americans would be a tremendous achievement, ideally, reform also would begin to reduce health costs for those individuals and families and businesses already paying for coverage.
