Health Rx Math: Heroic Efforts, Upfront Fees
By JED GRAHAM, INVESTOR'S BUSINESS DAILY
Posted 11/19/2009 09:03 PM ET
investors.com
To make its budget math add up, the Senate packs bigger health care subsidies into fewer years, sacrificing near-term help for the uninsured and longer-term deficit-reduction.
Senate Majority Leader Harry Reid hailed the bill as a model of fiscal responsibility on Wednesday, touting a projection of $750 billion in lower deficits over two decades.
While that is technically true, the Congressional Budget Office score reveals that the actual savings would smaller, minuscule compared to the fiscal gap.
More importantly, CBO's analysis drives home just how difficult it will be to find big health care savings if Reid's $900 billion-plus bill passes — and, perhaps, even if it doesn't.
Politically Incorrect
Under proposed cuts in the bill, Medicare's annual cost increases would slow to an inflation-adjusted 2% per beneficiary over the next two decades, down from 4% over the past 20 years, CBO said.
"Whether such a reduction in the growth rate could be achieved through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care is unclear," CBO director Doug Elmendorf wrote in a letter to Reid.
Elmendorf said that CBO's projection of modest net savings hinged on lawmakers keeping the big cost-cutting measures in place, and he noted a prime example of Congress doing the opposite.
Democrats are trying to push through a $200 billion-plus fix of a law that reduced the growth of physician payments under Medicare. Congress has repeatedly voted to keep those reductions from taking effect. The Reid bill would provide a one-year fix, but physician rates would be scheduled to drop 23% in 2011.
"You have to be fairly naive to actually believe that Congress would lower the spending rate in Medicare that abruptly," said American Enterprise Institute health care economist Joseph Antos.
But suppose Congress does follow through with such unprecedented spending curbs to pay for a new health care entitlement.
"Then you have dug a hole and filled it up again, and you've used up the tools that would be very important" for deficit reduction, Antos said.
With budget analysts projecting $10 trillion in cumulative deficits this decade, CBO says the Senate health bill would save a net $130 billion over the first 10 years.
But $72 billion would be related to a new, voluntary long-term care insurance program called CLASS. The Community Living Assistance Services and Supports program is designed to be deficit-neutral long-term, meaning a surplus of up-front premium payments would lead to annual operating deficits after 2029. |
