Congress’ chief scorekeeper put a crimp in Democrats’ goal of passing health care reform this year by estimating that their proposals may cost more than expected and may bump millions of people out of their employer-provided insurance.
The Congressional Budget Office (CBO) said that a new public health plan or more tax subsidies for private insurance would add about $100 billion a year in federal health care spending, and still wouldn’t be enough to cover the skyrocketing cost of medical care unless combined with “fundamental” changes in the way health care is financed and delivered.
President Obama has said any plan to expand health care coverage must not add to deficits - a stamp of approval that only the CBO can deliver - making the CBO assessments a significant hurdle to passage. Republicans and fiscally conservative Democrats are cautious of any bill that would add significantly to the national debt.
The report on controlling long-term costs was released a day after CBO calculated that a Senate plan by the Senate Health, Education, Labor and Pensions Committee would cost $1 trillion and still leave about 36 million uninsured.
The report also found that 15 million people likely would lose their employer-provided benefits, undermining Democrats’ pledge that Americans who like their current health care plans will be able to keep them.
The committee will start marking up the bill Wednesday. Democrats emphasized that the bill was incomplete and that CBO can’t score prevention and wellness measures that would provide savings. The bill was introduced by Sen. Edward M. Kennedy, who has been involved in the discussions from his home in Massachusetts as he battles brain cancer.
“These numbers are important,” Sen. Christopher J. Dodd, Connecticut Democrat and acting chairman of the committee, said of the CBO estimates. “We’re following them carefully. But … they’re preliminary.”
CBO Director Douglas W. Elmendorf said the proposals would hurt the economy if not paired with reforms on how the industry operates.
“Without meaningful reforms, the significant costs of many current proposals to expand federal subsidies for health insurance would be more likely to worsen the long-run budget outlook than to improve it,” he wrote on CBO’s Web site.
The report also suggests that the government could encourage health care savings by altering Medicare rates and ending the tax break on employer-provided benefits, an idea that most Democrats oppose.
The Senate Budget Committee requested the report. Chairman Kent Conrad, North Dakota Democrat, and Sen. Judd Gregg of New Hampshire, the ranking Republican on the committee, said in a joint statement that health care costs must be dramatically reduced.
“CBO finds that paying for health reform over the next 10 years doesn’t guarantee long-term savings,” they said. “Any expansion of insurance coverage under a health reform bill would be phased in over time, so the 10-year budget window is not the best indicator of its ultimate cost.”
Health care costs represent about 17 percent of the American economy, the report said.
“Significant savings seem possible because the available evidence implies that a substantial share of spending on health care contributes little if anything to the overall health of the nation,” the report said. “Therefore, experts generally agree that changes in government policy have the potential to produce substantial savings in both national and federal spending on health care without harming health.”
White House press secretary Robert Gibbs said Tuesday that the cost of not enacting health care reform could be more expensive than the CBO estimate.
“Inaction is something we simply can’t afford,” he told reporters.
Ken Baer, a spokesman for the administration’s budget office, said the CBO report gives momentum to Mr. Obama’s health care plans.
“We welcome the analysis. It validates the administration’s belief that health care costs are growing at an unsustainable rate and that we cannot afford the status quo,” Mr. Baer said. “While they acknowledged it will not be easy, they also point to many policies that the CBO believes could reduce costs in the long term, and many of those have already been proposed by the administration.”
CBO, in a second report Tuesday, also knocked down the health care industry’s pledge to cut $2 trillion in spending over the next decade - a promise made at a White House event with Mr. Obama in May. The group tried to measure the promise but found that certain aspects couldn’t be measured and others didn’t involve the federal government; the remaining items didn’t add up to $2 trillion.
“As predicted, the $2 trillion savings pledge didn’t materialize from CBO’s perspective,” said Sen. Charles E. Grassley of Iowa, the ranking Republican on the Senate Finance Committee. “The headlines generated by the White House event a month ago don’t get us much closer to affording health care reform today.”
The bill from the Health, Education, Labor and Pensions Committee is just the first to be scored by CBO. The Senate Finance Committee is scheduled to introduce a bill this week, and a group of House Republicans is expected to announce its own proposal Wednesday.
• Stephen Dinan contributed to this report.