WH report: Lower health costs in long run

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A White House report released Monday found that the health care overhaul bills on Capitol Hill would reduce the growth rate of national and private health care costs by 1 percent over “an extended horizon.”

The White House’s Council of Economic Advisers said that while the nation’s health care spending would rise initially as millions of additional people get coverage, within five to ten years the rate of increase would fall.

“Our bottom line is the bills as they are coming through will generally slow the growth rate of health care spending both public and private,” CEA Chairwoman Christina Romer said in a conference call with reporters.

The report found that if health spending falls, the nation’s gross domestic product would be 4 percent higher by 2013 and the average family’s income would increase by nearly $7,000 over the same period.

Stopping or even reversing the growth of the nation’s health care costs has been one of the top objectives of the health care reform legislation working its way through Capitol Hill. But reports on how the legislation would affect costs for the federal government and private individuals has been mixed. Both the Congressional Budget Office, Congress’ nonpartisan budget keeper, and the Centers for Medicare and Medicaid (CMS), the agency that administers Medicare, have concluded that the bills would increase the nation’s health costs.

CMS found that the Senate’s bill would increase the nation’s total health expenditures by 0.7 percent, or $234 billion, over the next 10 years. The group’s actuary found that some of the bill’s provisions — such as reductions in Medicare payments to providers, an independent Medicare payment board and an excise tax on high-cost insurance plans — would reduce costs, but they would be offset by the added cost of expanding health insurance coverage.

Ms. Romer acknowledged that health spending would increase initially as up to 30 million Americans get insurance coverage.

“You can’t do that and not spend more,” she said. “I do think we need to acknowledge the level of spending rises initially because we are getting a very important accomplishment.”

Ms. Romer said that within five to 10 years of the reform bill’s enactment, the growth rate would fall.

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