Health care fix to sicken budget?

WASHINGTON — The health-care measures being drafted by congressional Democrats would increase rather than reduce public spending on health care, potentially worsening an already bleak federal budget outlook, the director of the nonpartisan Congressional Budget Office said Thursday.

The sobering assessment from CBO Director Douglas Elmendorf came as House Democrats pushed to pass a partisan bill through committees, while a small group of senators sought a deal that could win support from both political parties.

Senators involved in the bipartisan talks said Thursday night they are making solid progress toward a compromise they claimed would hold down costs, but that it could take more time to work out difficult issues. That means President Obama's timetable for floor votes before August would slip.

"I think it would be prudent of the president to be patient and allow us the opportunity to work," said Sen. Olympia Snowe, R-Maine. "I don't think we should be bound by a timetable that isn't realistic."

Finance Committee Chairman Max Baucus, D-Mont., leader of the talks, said he's "quite confident" the group is "making a lot of progress" and would be ready fairly soon.

Earlier, under questioning by members of the Senate Budget Committee, Elmendorf said bills crafted by House leaders and the Senate health committee do not propose "the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount."

"On the contrary," he said, "the legislation significantly expands the federal responsibility for health-care costs."

From the beginning of the health-care debate, Obama has insisted any overhaul must "bend the curve" of rapidly rising costs that threaten to swamp the budgets of government, businesses and families. The measures put forth so far would not fulfill that pledge, Elmendorf said. Instead, he said, "the curve is being raised."

The CBO is the official arbiter of the costs of legislation, and Elmendorf's stark testimony is certain to undermine support for the current measures.

Fiscally conservative Democrats in the House, known as the Blue Dogs, already were threatening to block passage of legislation in the Energy and Commerce Committee, primarily due to concerns about the long-term costs of the chamber's bill.

Cost also is a major issue in the Senate, where some moderate Democrats have joined Republicans in calling on Obama to drop his demand that both chambers approve a bill this summer.

While the Senate health committee approved its bill Wednesday with no Republican votes, Finance Committee members still were struggling to craft a bipartisan, more cost-effective measure.

The Senate Budget Committee chairman, Kent Conrad, D-N.D., has taken a leading role in that effort. After receiving Elmendorf's testimony on the long-term budget outlook, Conrad turned immediately to questions about the emerging health-care measures.

"I'm going to really put you on the spot," Conrad told Elmendorf. "From what you have seen from the products of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?"

Elmendorf responded: "No, Mr. Chairman."

Asked what provisions would be needed to slow the growth in federal health spending, Elmendorf urged lawmakers to end or limit tax-free treatment of employer-provided health benefits, calling it a federal "subsidy" that encourages spending on ever more expensive health packages.

Some senators, including Conrad and Baucus, have been pressing to tax employer-provided benefits, against the wishes of Obama. Senate leaders said last week the idea does not have enough support among Senate Democrats to win passage, though there's wide agreement among economists that such a tax would give businesses and individuals an incentive to become thriftier health-care consumers.

White House officials played down the significance of Elmendorf's assessment, calling it premature. "At the end of the day, we'll have significant cost controls," presidential adviser David Axelrod said.

Senate Majority Leader Harry Reid, of Nevada, also dismissed the budget director's push for the benefits tax. "What he should do is maybe run for Congress," Reid said.

Elmendorf also suggested changing the way Medicare reimburses providers to create incentives for reducing costs.

"Certain reforms of that sort are included in some of the packages," he said. "But the changes that we have looked at so far do not represent the sort of fundamental change, the order of magnitude that would be necessary to offset the direct increase in federal health costs that would result from the insurance coverage proposals."

Despite the flashing yellow light from the CBO, Congress pushed ahead Thursday.

Three committees shifted into action on the House version. Bills in both chambers call for creation of a government insurance plan to compete with private coverage, although they differ on details.

House Democrats won a coveted endorsement of their legislation from the American Medical Association. The insurance industry opposes the bill, saying a government plan "will cause millions of patients to lose their current coverage."

The House Education and Labor Committee passed an amendment to speed up access to health insurance for people with pre-existing conditions to six months after the bill takes effect.

The tax-writing Ways and Means Committee also was working on a piece of the legislation, which seeks to provide coverage to nearly all Americans by subsidizing the poor and penalizing individuals and employers who don't purchase health insurance. It would boost taxes on high-income people and slow Medicare and Medicaid payments to providers.

Majority Democrats on both panels turned back GOP efforts to strip out the government plan and requirements on employers to provide health coverage, among other things.

The third House committee, Energy and Commerce, also was considering the measure Thursday, but Rep. Mike Ross, D-Ark., said he and other Blue Dogs would need significant changes to protect small businesses and rural providers and contain costs before it could sign on.