CBO Says Plans Don’t Do Enough To Control Health Care Spending
Congressional Democrats' health care reform proposals do not include "the sort of fundamental changes" needed to curb the rising cost of government health programs, particularly Medicare, Congressional Budget Office Director Douglas Elmendorf said on Thursday during a Senate Budget Committee hearing, the Washington Post reports (Montgomery/Murray, Washington Post, 7/17).
"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," he said, adding that "on the contrary, the legislation significantly expands the federal responsibility for health care costs" (Budoff Brown, Politico, 7/16).
Although Democrats repeatedly have pledged to rein in the rising curve of federal health spending, the proposals would not achieve that goal, according to Elmendorf.
He added, "The curve is being raised."
During the hearing, Committee Chair Kent Conrad (D-N.D.) asked if legislation committees have reported would help curb rising health care costs.
Elmendorf said the legislation would not, adding that the House Democrats' bill would add more than $1 trillion to federal health spending over the next decade while cutting about $500 billion from existing proposals.
According to Elmendorf, some of the provisions in the bill potentially could reduce spending further (Washington Post, 7/17).
Elmendorf said in order to offset the cost of subsidies to help people purchase health coverage, "there would have to be very substantial reductions in other parts of the federal commitment to health care, either on the tax revenue side, through changes on the tax exclusion, or on the spending side, through reforms in Medicare and Medicaid."
He continued, "Certainly reforms of that sort are included in some of the packages, and we are still analyzing the reforms in the House package, the legislation was only released two days ago" (Sanchez/Edney, CongressDaily, 7/16).
Elmendorf added that even if the legislation did not add to the federal deficit in the short term, health care costs over the long term would continue to rise at an unsustainable pace (AP/USA Today, 7/16). However, he added that it is "very hard to look out ... and say very accurate things about growth rates" (Hitt, Wall Street Journal, 7/17).
Also during his testimony, Elmendorf cited a recent CBO report that showed federal spending on Medicare and Medicaid would increase from the current 5% of gross domestic product to nearly 10% in 2035 and to more than 17% by 2080.
Without policy changes, in 2080 the federal government would be spending almost as much on Medicare and Medicaid as it has spent on all of its programs and services in recent years, according to the report. He added that spending cuts in Medicare and Medicaid are not enough to offset the costs of the reform bills (Haberkorn/Miller, Washington Times, 7/17).
Elmendorf suggested adding provisions to the bills that would change the way Medicare reimburses providers to create incentives for reducing costs.
In addition, Elmendorf suggested ending or limiting the tax exemptions for employer-sponsored health benefits (Washington Post, 7/17).
He said, "We have a subsidy for larger health insurance policies in our tax code, and that, like other subsidies, encourages more of that activity," adding, "Reducing that subsidy would reduce that."
The issue of taxing benefits or capping the tax-exempt level has been a point of contention for congressional Democrats -- who are divided on the issue -- and President Obama, who has said that he prefers not to tax benefits at any level (Politico, 7/16).
Senate Finance Committee Chair Max Baucus (D-Mont.) said, "Clearly our committee will do what it can," adding, "We are very seriously concerned about that issue. We very much want to come up with a bill that bends the cost curve" (Clarke/Epstein, CQ Politics, 7/16).
Conrad said that lawmakers should take Elmendorf's comments "very seriously." He said, "We are taking on debt in a way that is utterly unsustainable," adding, "This has to be faced up to. I remain an optimist. I think people, when confronted with facts, respond to them, and I think virtually every member knows this has to be dealt with" (Politico, 7/16).
Rep. Mike Ross (D-Ark.), chair of the House Blue Dog Coalition's health care task force, said, "There's no way they can pass this bill on the House floor. Not even close" (Washington Post, 7/17).
Ross continued, "We have to take steps to hold health care costs to the rate of inflation, or we will never balance our federal budget again and health insurance costs will continue to become less and less affordable for the American people" (Wall Street Journal, 7/17).
Rep. Jim Matheson (D-Utah) said that Elmendorf's analysis of the proposals "is of great concern." He said, "If we don't reform the system to get costs under control, then nothing else matters," adding, "We're just putting more people into a broken system."
The Obama administration disagreed with Elmendorf's assessment, saying the Senate Health, Education, Labor and Pensions Committee's bill does not include funding mechanisms because that falls under the Senate Finance Committee's jurisdiction.
White House officials also noted that CBO still is scoring the new House measure (Politico, 7/16).
House Speaker Nancy Pelosi (D-Calif.) said that she supports efforts to improve reform bills, adding that "this is what the legislative process is about. You don't write the whole bill, introduce it and then go to the floor. This is the time now for an open process of bipartisan review of the bill in the committees."
Republicans Weigh In
House Minority Leader John Boehner (R-Ohio) said that Elmendorf's comments prove "that one of the Democrats' chief talking points is pure fiction" (Washington Post, 7/17).
Senate Minority Leader Mitch McConnell (R-Ky.) said that Elmendorf's testimony should be "a wake-up call," adding, "[I]nstead of rushing through one expensive proposal after another, we should take the time we need to get things right" (AP/USA Today, 7/16).
In a statement, Republican Conference Chair Mike Pence (R-Ind.) said, "The health care proposal by Congressional Democrats amounts to a government takeover of our health care economy" (Pear, New York Times, 7/17).
Also in a statement, Senate Budget Committee ranking member Judd Gregg (R-N.H.) said that Elmendorf "indicated that the present plans contain no significant changes to reduce federal costs relative to reimbursement and the overall health care structure" (Young, The Hill, 7/16).
Sen. Olympia Snowe (R-Maine) said that Elmendorf's testimony "indicated the fact that we have more work to do, and certainly about reining in health care costs over the long term," adding, "And we're looking for any input from the administration, as well, as to how we can accomplish that" (Politico, 7/16).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.