Congressional Budget Office: health care reform bills would raise, not lower, costs — MedCity Morning read, July 17, 2009

Douglas Elmendorf

WASHINGTON, D.C. — Democrats’ health care legislation won’t meet President Barack Obama’s goal of slowing the growth of medical costs, Congressional Budget OfficeDirector Douglas Elmendorf told Congress on Thursday, according to the Associated Press.

Elmendorf’s preliminary conclusions were basedon a bill jointly released by three House committees this week and another bill passed by the Senate health committee on Wednesday, CNNMoney said.

From the beginning of the debate, President Obama has said reform must “bend the curve” of rapidly rising health care costs for government, businesses and families. That is, bend the curve down.

Asked Thursday by Senate Budget CommiteeChairman Kent Conrad, a North Dakota Democrat, whether bills proposed by Senate and House committees would bend the curve, Elmendorf responded, as things stand now, “the curve is being raised,” the Associated Press said.

Elmendorf explained: “In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs,” the AP said.

Both the House bill and the Senate health committee bill would use federal money to subsidize low-income Americans so they could buy health insurance. The bills also would create a national insurance exchange from which eligible Americans could choose among insurance plans, including a public plan that would compete with private insurers on the exchange, CNN said.

Health policy analysts support two ways to “bend the curve” on health care costs above others, Elmendorf said, according to CNN.

Change how employer-paid premiums for workers are treated — currently they’re tax-free to the worker.
Change how Medicare pays providers to reward cost efficiency and quality of outcomes rather than quantity of care.

Even if the legislation doesn’t add to the federal deficit over the next decade, health care costs would continue to rise at an unsustainable rate, Elmendorf said. Obama and most Democrats don’t want to tax employer-paid health insurance benefits, which some economists say could give businesses and individuals incentives to be thriftier consumers, according to the Associated Press.

Meanwhile, the Commonwealth Fund released an issue brief that describes how a private-public approach to reform — a national insurance exchange that largely replaces the individual and small-group markets — could substantially lower insurance administration costs.

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