California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

CMS: Savings From Reform Law Could Be Lower Than Anticipated

The new health reform law would extend health benefits to as many as 34 million uninsured U.S. residents, but projected national health spending would increase by $311 billion, or about 1%, from 2010 through 2019, according to a CMS Office of the Actuary report released Thursday, the AP/San Francisco Chronicle reports (Alonso-Zaldivar, AP/San Francisco Chronicle, 4/23).

CMS Chief Actuary Rick Foster estimated that expanding coverage to uninsured residents would cost $828 billion over 10 years, while the overhaul would save $577 billion.

Foster noted that his estimates did not factor in changes to the tax code under the new law, which the Congressional Budget Office has estimated would more than offset the difference and reduce the federal deficit (Cusack, The Hill, 4/22).

The report warned that projected savings could diminish if Congress does not move forward with proposed cuts to Medicare, the Los Angeles Times reports (Levey, Los Angeles Times, 4/22).

The report also found that:

  • Health care spending could increase by more than $311 billion because Medicare cuts in the new reform law could be "unrealistic" and "unsustainable." The report estimated that about 15% of hospitals and other health care providers could lose money on Medicare beneficiaries as a result of the proposed cuts and be forced to stop treating such patients;
  • Payment cuts to private Medicare Advantage plans would result in an enrollment decrease in the MA program of as much as 50%. Although beneficiaries who drop their MA plans still would have access to traditional Medicare coverage, they could end up paying more out-of-pocket, according to the report (AP/San Francisco Chronicle, 4/23);
  • The overhaul would lower Medicare premiums for beneficiaries and extend the viability of the program until 2029, or about 12 years longer than CMS previously had projected (Los Angeles Times, 4/22);
  • Some businesses would stop offering health benefits to workers because more workers likely would "become enrolled in the expanded Medicaid program or receive subsidized coverage through" the health exchanges created by the new reform law (The Hill, 4/22); and
  • There is "a very serious risk" of insolvency to the CLASS program, a new voluntary long-term care insurance program that will be created by the new reform law.
White House officials said that $311 billion is "a bargain price" for ensuring that 95% of U.S. residents have health coverage, according to the AP/Chronicle. Administration officials also noted that the new reform law is projected to cut the deficit by $143 billion over the 10-year period (AP/San Francisco Chronicle, 4/23). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.