Some experts challenge White House claims of health reform cost savings
WASHINGTON – One of the White House's biggest boasts about the health care legislation now moving through Congress is that it should reduce health care costs for both government and society.
Many prominent experts are skeptical, however, and some say that the Obama administration is wrong.
"There are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform," Dr. Jeffrey Flier, dean of the Harvard Medical School, wrote in the Wall Street Journal on Nov. 18. "In discussions with dozens of health care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health care spending rather than restrain it."
Most Capitol Hill Democrats cheered last week when the nonpartisan Congressional Budget Office estimated that the Senate bill, which lawmakers will begin to debate next week, should reduce federal budget deficits by $130 billion over the next 10 years and perhaps more after 2020, even as its costs are put at $848 billion over a decade.
Embedded in the CBO's analysis were a lot of blinking yellow lights, however. The CBO figured that deficits would drop by $136 billion from 2010 to 2014, as tax increases go into effect but major health care changes don't. However, once the policy changes start kicking in, beginning in 2014, the CBO estimated that the deficit would rise by about $6 billion over the next five years.
From 2020 to 2029, while the CBO said that health care savings should cause deficits to drop sharply, it also warned that any precise forecasts "would not be meaningful because the uncertainties involved are simply too great."
As a result, "the honest answer is that nobody knows" whether meaningful savings are possible, said Robert Bixby, the executive director of the Concord Coalition, a bipartisan budget watchdog group.
Many of the same uncertainties cloud the nearer-term picture. Analysts ask how anyone can calculate patients' medical needs in the future. Will the bulging, aging baby-boomer population create new strains on doctors and hospitals? What kind of medical advances could bring down costs – or increase them?
Those are just the health-related questions. Who'll be president beyond 2012? Which party will control Congress? How will the economy perform?
"The problem is that historically, Congress has not been able to keep its word on constraining costs," said Amitabh Chandra, a professor of public policy at Harvard University's John F. Kennedy School of Government.
None of these questions is stopping the Obama administration and its supporters from insisting that health care costs can be brought under control.
Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a liberal research group, called the bill "a stark and welcome change" because of its attempts to balance spending and revenues.
Other analysts, though, say that supporters lack strong answers to the most vexing questions.
Foremost is the future of the government-run health insurance plan, or public option, that would compete with the private sector. The Senate bill would permit states to opt out of the program.
The CBO predicted that the public plan is likely to charge higher premiums than private competitors do, as it absorbs consumers that private insurers don't want. After the plan gets government start-up money, premiums are supposed to cover costs.
But, said Sen. Blanche Lincoln, D-Ark., "If in fact premiums don't cover the cost of the public plan, it is taxpayers in this country who are faced with the burden of bailing it out."
That raises another question: What if more people sign up than expected? How many people would need government subsidies, which are to go to those who earn less than 400 percent of the poverty level, or currently about $88,000 for a family of four? If the economy turns sour, the cost of that aid could soar.
The Obama administration says that savings would come not only from tax increases, but also from a series of changes in how doctors, hospitals and other health care providers are reimbursed. The public option would negotiate rates with providers, presumably resulting in rates that don't grow more than the rate of inflation, rates that private insurers could be compelled to adopt.
The White House also cites three other major proposed changes in the way that doctors, hospitals and other providers are paid that could yield savings: more electronic record-keeping; new ways of promoting quality care; and an Independent Medicare Advisory Board that would recommend changes aimed at limiting the program's growth.
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