Audit shows higher spending under House health bill over 10 years

A healthcare reform bill approved by a House committee in July would increase national spending on healthcare by 2.1 percent over 10 years, according to federal auditors.

That increase, amounting to $750 billion, would largely be the result of increased demand for healthcare services because 34 million people would have health coverage, according to a report issued Wednesday by the Office of the Actuary, an independent entity within the federal Centers for Medicare and Medicaid Services (CMS).

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Moreover, the reduced Medicare spending in the bill “would not have a significant impact on future health care cost growth rates,” the actuaries concluded, expressing skepticism that medical providers could continue serving Medicare and Medicaid patients at lower payment rates and leading Congress to rescind the cuts.

In addition, other reforms intended to contain costs, such as promoting prevention and wellness, would have a “negligible financial impact,” the report says.

“We estimate that the provisions of H.R. 3200 that were designed, in part, to reduce the rate of growth in health care costs would have a relatively small savings impact,” says the report, signed by CMS Chief Actuary Richard Foster, a career federal employee who has held that post since 1995.

Republicans seized on the findings to bolster their arguments against the bill.

“The Democrats’ bill will not reduce the amount America spends on health care; it will only make the situation worse. We need a common-sense, step-by-step approach that first focuses on reducing costs and then focuses on targeting assistance to those most in need,” Rep. Dave Camp (R-Mich.), ranking member of the Ways and Means Committee, said in a statement.

The trade group America's Health Insurance Plans, now seemingly engaged in a full-fledged campaign to discredit the Democratic healthcare reform bills, distributed copies of the CMS actuaries report to a reporter on Wednesday evening, along with a list of what a spokesman called "highlights."

The report refers to a version of healthcare reform approved by the Ways and Means Committee in July. Speaker Nancy Pelosi (D-Calif.) is close to releasing a new version of the bill that is likely to be substantially difficult. In particular, Pelosi has sought to win the support of fiscally conservative Blue Dog Democrats for the House bill by including additional cost-containment measures in the legislation.

The actuaries report is “incomplete and out-of-date relative to what will ultimately be voted on in the House of Representatives,” Rep. Pete Stark (D-Calif.), chairman of the Ways and Means Committee’s Health Subcommittee, said in a statement.

The CMS actuaries report is not the first assessment of a House healthcare reform that called into question Democrats’ claims of fiscal responsibility.

Though the official Congressional Budget Office (CBO) of the same bill concluded it would be deficit-neutral over 10 years, mostly because Medicare cuts and tax increases would offset new spending, CBO Director Doug Elmendorf subsequently said the measure would add to the deficit in future years.

Many of the actuaries’ findings are consistent with the CBO report on the bill, including their projections that federal spending on new health insurance subsidies and the addition of millions of people to the Medicaid rolls would reach just over $1 trillion over 10 years.

One of the findings in the report, also basically consistent with the CBO analysis, is sure to cheer Democrats: The actuaries conclude that a government-run health insurance program would provide less expensive coverage than private insurance.

According to the report, 40 percent of the 27 million people who would buy coverage through the bill’s health insurance exchange in the bill would choose the public option because its premiums would be about 11 percent lower than private insurance.

The Office of the Actuary, a little-known non-political component of the massive agency the runs Medicare and Medicaid that routinely issues analyses for the agency and shares them with lawmakers, has become embroiled in partisan fights in the past over its cost assessments.

In 2003, the actuaries estimated that the Republican-drafted bill to create the Medicare prescription drug benefit would cost $551 billion over 10 years, not the $400 billion budgeted by the George W. Bush administration and estimated by the CBO.

According to Foster’s account at the time, then-CMS Administrator Tom Scully forbade him from sharing the findings with lawmakers and threatened to fire him if he did. Scully denied the accusation. The episode sparked congressional hearings and an internal investigation by the Department of Health and Human Services.