US health care tab would grow under overhaul

The nation's medical costs will keep spiraling upward even faster than they are now under Democratic legislation pending in the House, a report from government economic experts concluded Wednesday.

Republicans said the report is a warning sign that health care legislation is likely to fall short of President Barack Obama's goal of "bending the cost curve" by slowing torrid rates of medical inflation.

The Obama administration immediately challenged the analysis, saying it is out of date because the House bill is being rewritten to bring costs under tighter control and will be merged eventually with other House legislation and a Senate bill.

"This is old news," said Nick Papas, a spokesman for the Health and Human Services Department.

The report from the Office of the Actuary, which does long-range cost estimates for Medicare, carried an unusual disclaimer, saying that it "does not represent an official position" of Health and Human Services or the rest of the administration.

Unlike previous estimates that have focused mainly on the legislation's impact on the federal deficit, the actuaries' report looked at total costs, public and private, over the next 10 years. It found that the nation's health care tab would increase somewhat more rapidly with the legislation than if nothing is done. The main reason: Newly insured people will seek medical care.

The nation's health care tab, now at about $2.5 trillion annually, is projected to approach $4.7 trillion in 2019 without the legislation.

With the legislation, national health care spending would be nearly $4.8 trillion in 2019.

Health care would account for 21.3 percent of the U.S. economy in 2019, slightly more than an estimated share of 20.8 percent of the economy if no bill passes. Economists have warned such increases are unsustainable.

"With the exception of the proposed reductions in Medicare ... (the legislation) would not have a significant impact on future health care cost growth rates," the report said. Moreover, it's "doubtful" that proposed Medicare cuts will stay in place, the analysts concluded.

Measures in the legislation to reduce cost may take 15 years to 20 years to deliver a savings dividend, the report said.

It also cautioned that tens of millions of newly insured people could put a strain on the health care system.

"The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting and/or changes in providers' willingness to treat patients with low-reimbursement health coverage," the analysts concluded.

Republicans said the report validates their concerns that the sweeping changes proposed by Obama and other Democrats fail to address the nation's medical costs problem.

"The Democrats' bill will not reduce the amount America spends on health care," said Rep. David Camp, R-Mich., the ranking GOP member of the House Ways and Means Committee. "It will only make the situation worse."

The insurance industry also took note of the report, saying it backs up its own research showing that the health care legislation would raise costs.

"This is the latest report showing that the current proposals will have the unintended consequence of causing health care costs to increase more than they would under the current system," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the main industry trade group. "These issues can be resolved if Congress puts the nation on a path to universal coverage and takes strong steps to bend the health care cost curve."

Unlike the House bill, the Senate Finance Committee legislation contains provisions that economists believe would have a more immediate impact on costs, such as a tax on high-premium health insurance plans. The insurance industry also opposes that approach.