CBO Chief Criticizes Democrats' Health Reform Measures

[masuki bance]

CBO Chief Criticizes Democrats' Health Reform Measures
Director Says Proposed Changes Would Increase Health Care Spending
Thursday, July 16, 2009; 2:25 PM

Instead of saving the federal government from fiscal catastrophe, the health reform measures being drafted by congressional Democrats would increase rather than reduce public spending on health care, potentially worsening an already bleak budget outlook, the director of the nonpartisan Congressional Budget Office said this morning.

Under questioning by members of the Senate Budget Committee, CBO director Douglas Elmendorf said bills crafted by House leaders and the Senate health committee do not propose "the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount."

"On the contrary," Elmendorf said, "the legislation significantly expands the federal responsibility for health-care costs."

Though President Obama and Democratic leaders have said repeatedly that reining in the skyrocketing growth in spending on government health programs such as Medicaid and Medicare is their top priority, the reform measures put forth so far would not fulfill their pledge to "bend the cost curve" downward, Elmendorf said. Instead, he said, "The curve is being raised."

The CBO is the official arbiter of the costs of legislation, and Elmendorf's stark testimony is certain to undermine support for the measures even as three House panels begin debate and aim to put a bill on the House floor before the August recess. Fiscal conservatives in the House, known as the Blue Dogs, were already threatening to block passage of legislation in the Energy and Commerce Committee, primarily due to concerns about the long-term costs of the House bill.

Cost is also a major issue in the Senate, where some moderate Democrats have joined Republicans in calling on Obama to drop his demand that both chambers approve a bill before the August recess. While the Senate health committee approved its bill on Wednesday with no Republican votes, members of the Senate Finance Committee were still struggling to craft a bipartisan measure that does more to restrain costs.

The chairman of the Senate Budget Committee, Kent Conrad (D-N.D.), has taken a leading role in that effort. This morning, after receiving Elmendorf's testimony on the nation's long-term budget outlook, Conrad turned immediately to questions about the emerging health care measures.

"I'm going to really put you on the spot," Conrad told Elmendorf. "From what you have seen from the products of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?"

Elmendorf responded: "No, Mr. Chairman."

Asked what provisions would be needed to slow the growth in federal health spending, Elmendorf urged lawmakers to end or limit the tax-free treatment of employer-provided health benefits, calling it a federal "subsidy" that encourages spending on ever more expensive health packages. Key senators, including Conrad, have been pressing to tax employer-provided benefits, but Senate leaders last week objected, saying the idea does not have enough support among Senate Democrats to win passage.

Elmendorf also suggested changing the way Medicare reimburses providers to create incentives for reducing costs.

"Certain reforms of that sort are included in some of the packages," Elmendorf said. "But the changes that we have looked at so far do not represent the sort of fundamental change, the order of magnitude that would be necessary to offset the direct increase in federal health costs that would result from the insurance coverage proposals."

Senate Majority Leader Harry M. Reid (Nev.) dismissed Elmendorf's push for the benefits tax. "What he should do is maybe run for Congress," Reid said.

But Senate Finance Chairman Max Baucus (D-Mont.) expressed frustration that the tax on employer-funded benefits had fallen out of favor, in part because the White House opposes the idea. Critics of the proposal say it would target police and firefighters who receive generous benefits packages. And if the tax is trimmed to apply only to upper income beneficiaries, it would lose its effectiveness as a cost-containment measure.

"Basically the president is not helping," Baucus said. "He does not want the exclusion, and that's making it difficult."

...

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/16/AR2009071602242.html?hpid=topnews

[Liberal_Stalwart71]

1. I need help understanding this. I thought that the Kennedy public option proposal

would DECREASE, not INCREASE costs. The CBO must be conducting another analysis of Conrad's bill.

[uponit7771]

2. 5000.00 per person per yr is my understand, a family of 4 would pay 20k or 10 if subsidised...

...instead of telling the insurance companies to go pound sand these guys stand right by their over inflated ass'd costs

[lumberjack_jeff]

4. I think all of the plans decrease costs.

But a larger share of the remaining ones go to the government.

Jesus, what a tightrope.

The way to make it as cheap as possible is to pay for the entire system with taxes. No useful solution makes it cheaper for government in the short term.

[masuki bance]

6. Where do you get that info? ie. all of the plans reduce costs. nt

[lumberjack_jeff]

9. All of the competing plans from the house and the senate

... will, over time, reduce the cost of healthcare relative to what it would have been. It is currently 16% of gdp. Without reform it will reach 20% by 2018.

None of them will prevent government from shouldering an increasing share.

[masuki bance]

10. None of the plans reduce Gov't spending, every single one

of them will increase Gov't spending?


"...As part of their healthcare proposal, Democrats included $544 billion in taxes targeting the wealthiest 1.2 percent of taxpayers. The remainder of the $1.04 trillion price tag would be offset through changes to Medicare and Medicaid designed to save the government hundreds of billions of dollars.

“I hope we can change that percentage and get much more coming from savings,” Pelosi said. “In fact, I believe that all of the cost of the healthcare reform bill can come from squeezing more savings out of the system."

Asked why Democrats were proposing more than $500 billion in new taxes if savings alone could fund their healthcare plan, Pelosi said: “We have to have a revenue stream to ensure that the bill will be paid for. If we don’t need that money we can use it to reduce the deficit.”...

http://thehill.com/leading-the-news/healthcare-taxes-could-shift-to-deficit-reduction-2009-07-16.html

[lumberjack_jeff]

11. I think that's what I said.

All of the solutions which reduce the overall cost of healthcare, do so at the expense of forcing a larger share of it onto government.

[Laelth]

3. Yes! Thank goodness! Someone is willing to speak the truth!

:applause:

:dem:

-Laelth

[DrToast]

5. Good points. There aren't enough cost containment measures in there.

There's still time.

[MarjorieG]

7. Is this just the Senate, with surtax on 1%, or something else? Speaking about HELP also?

[customerserviceguy]

8. He's probably right

Nothing less than single-payer with true tort reform (not mere caps) is going to wring out the waste and abuse that is throttling the current system. From what I've seen of the plan, it just feeds the beast even more.