WASHINGTON (AP) - President Barack Obama's health care overhaul
law will increase the nation's health care tab instead of bringing
costs down, government economic forecasters concluded Thursday in a
sobering assessment of the sweeping legislation.
A report by economic experts at the Health and Human Services
Department said the health care remake will achieve Obama's aim of
expanding health insurance - adding 34 million Americans to the
But the analysis also found that the law falls short of the
president's twin goal of controlling runaway costs. It also warned
that Medicare cuts may be unrealistic and unsustainable, driving
about 15 percent of hospitals into the red and "possibly
jeopardizing access" to care for seniors.
The mixed verdict for Obama's signature issue is the first
comprehensive look by neutral experts.
In particular, the warnings about Medicare could become a major
political liability for Democratic lawmakers in the midterm
elections. Seniors are more likely to vote than younger people and
polls show they are already deeply skeptical of the law.
The report from Medicare's Office of the Actuary carried a
disclaimer saying it does not represent the official position of
the Obama administration. White House officials have repeatedly
complained that such analyses have been too pessimistic and lowball
the law's potential to achieve savings.
The report acknowledged that some of the cost-control measures
in the bill - Medicare cuts, a tax on high-cost insurance and a
commission to seek ongoing Medicare savings - could help reduce the
rate of cost increases beyond 2020. But it held out little hope for
progress in the first decade.
"During 2010-2019, however, these effects would be outweighed
by the increased costs associated with the expansions of health
insurance coverage," wrote Richard S. Foster, Medicare's chief
actuary. "Also, the longer-term viability of the Medicare ...
reductions is doubtful." Foster's office is responsible for
long-range costs estimates.
Republicans said the findings validate their concerns about
Obama's 10-year, nearly $1 trillion plan to remake the nation's
health care system.
"A trillion dollars gets spent, and it's no surprise - health
care costs are going to go up," said Rep. Dave Camp, R-Mich., a
leading Republican on health care issues. Camp added that he's
concerned the Medicare cuts will undermine coverage for seniors.
The health care law, passed by a divided Congress after a year
of bitter partisan debate, would create new health insurance
markets for individuals and small businesses. Starting in 2014,
most Americans would be required to carry health insurance except
in cases of financial hardship. Tax credits would help many
middle-class households pay their premiums, while Medicaid would
pick up more low-income people. Insurers would be required to
accept all applicants, regardless of their health.
A separate Congressional Budget Office analysis, also released
Thursday, estimated that 4 million households would be hit with tax
penalties under the law for failing to get insurance.
The U.S. spends $2.5 trillion a year on health care, far more
per person than any other developed nation, and for results that
aren't clearly better when compared to more frugal countries. At
the outset of the health care debate last year, Obama held out the
hope that by bending the cost curve down, the U.S. could cover all
its citizens for about what the nation would spend absent any
The report found that the president's law missed the mark,
although not by much. The overhaul will increase national health
care spending by $311 billion from 2010-2019, or nine-tenths of 1
percent. To put that in perspective, total health care spending
during the decade is estimated to surpass $35 trillion.
Administration officials argue the increase is a bargain price
for guaranteeing coverage to 95 percent of Americans.
The report's most sober assessments concerned Medicare.
In addition to flagging the cuts to hospitals, nursing homes and
other providers as potentially unsustainable, it projected that
reductions in payments to private Medicare Advantage plans would
trigger an exodus from the popular program. Enrollment would
plummet by about 50 percent, as the plans reduce extra benefits
that they currently offer. Seniors leaving the private plans would
still have health insurance under traditional Medicare, but many
might face higher out-of-pocket costs.
In another flashing yellow light, the report warned that a new
voluntary long-term care insurance program created under the law
faces "a very serious risk" of insolvency.
(Copyright 2010 by The Associated Press. All Rights Reserved.)