Government report: Health law could hike prices, make employers drop coverage

A new government report from Rick Foster, the chief actuary of the Centers for Medicare and Medicaid Services (CMS), finds that President Barack Obama's new healthcare reform law would cost $828 billion over the next decade while saving $577 billion.

Foster notes that CMS's projections do not take into account changes to the tax code that have been enacted. The Congressional Budget Office (CBO) reported that over the next 10 years, the healthcare package would decrease the deficit.

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The CMS analysis, provided to The Hill on Thursday, concludes that the healthcare overhaul will reduce the number of the nation's uninsured from 57 million to 23 million.

However, the report raises several warnings about the impact of healthcare reform.

Foster states, "The additional demand for health services could be difficult to meet initially with existing health resources and could lead to price increases, cost shifting, and/or changes in providers' willingness to treat patients with low-reimbursement health coverage."



The report also suggests that some employers will stop offering their employees healthcare coverage benefits: "A number of workers who currently have employer coverage would likely become enrolled in the expanded Medicaid program or receive subsidized coverage through the [Health] Exchanges. For example, some smaller employers would be inclined to terminate their existing coverage, and companies with low average salaries might find it to their -- and their employees' -- advantage to end their plans..."

Foster claims that the law's penalties on employers who don't offer their workers health insurance "are relatively low compared to prevailing health insurance costs."

The CMS analysis projects that the Hospital Insurance trust fund would last until 2029 under the new law -- a dozen years more than the prior assessment of 2017. But Foster suggests that some of the savings in the law are unrealistic, indicating Congress will adjust the law's new provider reimbursements in the coming years.

Republicans in March criticized Democrats for moving forward with a vote on the controversial health legislation before CMS finalized its projections. Foster informed lawmakers that his office needed time to assess the law, and was unable to complete its analysis by the time Congress voted on the bill. Congress is bound by numbers released by CBO, which released its cost estimates before the final House and Senate votes.

Foster became embroiled in controversy in 2003 when his assessment of the Medicare drug law was significantly higher than CBO's. That cost estimate did not surface until the bill had been cleared by the GOP-led Congress.