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CMS Report: House Reform Bill May Not Bend Healthcare Cost Curve

Janice Simmons, for HealthLeaders Media, November 16, 2009

House Republicans, frozen out of the healthcare reform debate in many areas this year, jumped on the opportunity this past weekend to criticize Democrats through a new analysis of the House reform bill (HR 3962) from the Centers for Medicare and Medicaid Services' (CMS) Office of the Actuary. The analysis, by Chief Actuary William Foster, said that the bill may not bend the healthcare cost curve.

The analysis, requested by House Ways and Means Ranking Republican Dave Camp (R MI), predicts that between 2010 and 2019, the overall national health expenditures would increase by $289 billion, or 0.8%, from baseline projections established earlier this year. The national health expenditure share of the gross domestic product would rise to 21.1% in 2019.

"It's now beyond dispute that their bill will raise costs," said House Minority Leader John Boehner (R-OH) in a statement on Saturday. He added that instead of working with the GOP on reform, Democrats have ended up with "a healthcare monstrosity" that could "make things worse" for middle class families and small business. Instead, he called for Democrats to "toss their current proposal" and work with the Republicans on a new plan.

The report noted that Medicare cuts contained in the healthcare bill approved by the House on Nov. 7 could be costly to hospitals, nursing homes, and home health--and that providers could stop taking Medicare altogether in the next decade.

Payment update reductions would provide a "strong incentive for institutional providers to maximize efficiency," but it "is doubtful that many could improve their own productivity to the degree achieved by the economy at large." Congress could intervene to avoid such an outcome, but "so doing would likely result in significantly smaller actual savings" than is currently projected, according to the analysis.

Implementation of comparative effectiveness research, meanwhile, could translate into national health savings of about $8 billion annually from 2010 through 2019. This savings would develop gradually with changes in provider practice and culture, the analysis said.

However, "negligible financial impact" would be expected over the next 10 years for other proposals emphasizing prevention and wellness efforts to lower costs.

The actuary report does not go into the tax impact of the bill's proposals--suggesting that will be done by the Congressional Budget Office and the Joint Committee on Taxation. Their estimations for the Senate bill are expected any day.


Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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