Health Care: Cost Estimates may Scuttle Plan

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CMS, the Centers for Medicare and Medicaid Services, part of Health and Human Services, has provided some analysis of the new senate plan forwarded by a group of Democratic senators and majority leader Reid.

The “estimated financial effects” include some that may cause some moderate Democrats to withdraw support. An estimated 5 million Americans are expected to be dumped into the government plan by employers, while still leaving 24 million legal residents without insurance at all. Medicaid rolls would swell by 18 million, putting further pressure on state budgets that are already hurting. And overall health care spending would be increased by 11 billion dollars due to increased taxes and fees passed on to consumers.

New and increased taxes of 29 billion dollars and proposed cuts of 493 billion in Medicare help offset the costs of the plan, but have some problems of their own: reductions in payment to providers could result in less choice for seniors, a politically risky proposition. In some areas, losing a Medicare provider could result in the loss of all services for that area.

Net costs, after proposed cuts in spending and increases in taxes, is estimated to be an increase of 234 billion dollars. The report hedges its bets, though, with this statement, appearing right after the cost estimate:

The actual future impacts of the PPACA on health expenditures, insured status, individual decisions, and employer behavior are very uncertain. The legislation would result in changes in the way that health care insurance is provided and paid for in the U.S., and the scope and magnitude of these changes are such that few precedents exist for use in estimation.

The Senate plan relies on cuts and taxes that are unlikely to remain in the bill as horse-trading begins to gain passage, reducing further the “accuracy” of the CMS estimate.

The proposed Medicare “buy in” provision for residents 55 and older draws opposition in and of itself, with Sen. Joe Lieberman voicing his opposition:

Sen. Joe Lieberman told Senate Majority Leader Harry Reid Sunday that he couldn’t support a new Medicare proposal floated as a compromise to the public option, a development that complicates the bill’s path towards passage before the end of the year.

In a meeting in Reid’s office just off the Senate floor, aides said the Connecticut independent reiterated his concerns with the public insurance option and told the Nevada Democrat that he couldn’t support a new plan to allow people as young as 55 to buy into Medicare.

Missouri Democratic Sen. Claire McCaskill declared she would “absolutely” vote against any bill that increases the deficit, as President Obama has promised to veto any such measure. And even senate liberals have reservations:

And it’s not just moderates who have problems with the Medicare buy-in. On Friday, a group of 10 Democratic senators, including Wisconsin’s Russ Feingold and Vermont’s Patrick Leahy, wrote to Reid, worried that expanding the program without changing the rates Medicare pays to doctors would curtail seniors’ access to care. The letter came a day after a report by the Centers for Medicare and Medicaid Services found that the bill’s Medicare savings “may be unrealistic.”

After boldly announcing that a compromise had been reached, Reid saw his party’s senators “walk back” the statement. The compromise was only to send the proposal to the CBO for financial impact score, they said, most adding they remain committed to the idea of a deficit-neutral bill. The Politico article sums up the situation from Sen. Reid’s perspective:

If he kills a public option or the Medicare buy-in plan, he could lose the support of Sanders and several of the more liberal members of the Democratic conference. But keeping either of those plans, or one that would “trigger” a public option if private insurers don’t hold down costs, would lose Lieberman – forcing Reid to find at least one moderate GOP senator to advance the proposal.

To win the most likely potential GOP defector, Sen. Olympia Snowe (R-Maine), Reid would likely have to make modifications and slow the debate down since she’s signaled that the Senate needs to take more time to deal with the expansive issue.

Cross posted to FrankHagan.com