Oops. The Health and Human Services, Medicare Office of Actuary has just released a report that shows that one of the major talking points for the Administration when they were selling the health care overhaul—that the bill will reduce overall health care costs—is dead wrong.
Here’s how the Associated Press sums up the findings:
… the analysis also found that the law falls short of the president’s twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable, the report warned.
It’s a worrisome assessment for Democrats.
In particular, concerns about Medicare could become a major political liability in the midterm elections. The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, “possibly jeopardizing access” to care for seniors….
The report acknowledged that some of the cost-control measures in the bill — Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.
“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.” Foster’s office is responsible for long-range costs estimates.
In other words, the finding that health care spending will increase by just one percent is almost certainly a big under-estimate. Costs will most likely be higher. Much higher. And there was more bad news for Medicare:
In addition to flagging provider cuts as potentially unsustainable, the report projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular alternative. Enrollment would plummet by about 50 percent. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.
In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces “a very serious risk” of insolvency.
Americans intuitively knew that the claim that this massive bill, which expands health care to some 34 million people, would somehow reduce health spending was bogus. My question is why did this report just come out now? Isn’t this analysis that the American people and their Representatives deserved to have before the legislation became law?