Study finds good, bad news on health care bill

McClatchy NewspapersSeptember 9, 2009 

WASHINGTON — The House of Representatives' major health care overhaul plan would virtually pay for itself over the next decade and would expand insurance coverage dramatically, but from 2020 to 2029 it would add $1 trillion to the federal budget deficit, according to an independent study of the legislation that was released Wednesday.

The Lewin Group's findings came hours before President Barack Obama addressed the nation on health care at Wednesday in a rare evening speech to a joint session of Congress. He laid out some details about how he wants a health care overhaul measure to be crafted, and insisted that any plan must not increase the budget deficit.

The report gave him some good news, and a warning. David Walker, the president and chief executive officer of the Peter G. Peterson Foundation, a fiscal watchdog group that commissioned the study, noted, "The United States is going to last more than 10 years, and our challenge will become greater with the passage of time."

Three committees in the House of Representatives already have written bills, and the Lewin study examines the measure that the Energy and Commerce Committee approved this summer. That bill, which includes a government-run insurance plan, or "public option," that would compete with the private sector, will be combined with other measures into a single bill, probably later this month.

The Senate Health, Education, Labor and Pensions Committee has written similar legislation, while the Senate Finance Committee continues to seek bipartisan consensus. The public option appears to be in some trouble, and lawmakers signaled earlier this week that they could back a bill without it.

The Lewin Group study found that the Energy and Commerce package would cost $857 billion over 10 years. Savings in Medicare and Medicaid such as reductions in hospital spending, as well as higher taxes on people who earn the most, should bring the net cost to about $39 billion, almost fully paid for.

"Don't get too excited about that, though," warned John Sheils, the vice president of the Lewin Group, a health care consulting firm.

In the second decade, net costs would balloon to about $1 trillion, as spending on premium subsidies jumped to $2.23 trillion. Revenues, the study found, wouldn't keep up.

"Health care costs are going to continue to rise much faster than wages," Sheils said, probably about 6 percent a year. Incomes are projected to grow about 3.5 percent annually.

Over the first 10 years, however, the news is somewhat brighter. The study estimates that about 29.7 million people would get coverage by 2011, which would shrink the number of projected uninsured by 60 percent.

The bill would create health insurance exchanges, or marketplaces, in which consumers should shop for coverage. The study estimates that 41 million people would obtain coverage through those exchanges, including 21 million in a public plan.

Families in which all members now have insurance would save an average of about $176 a year, while employer health spending would go up by about $305 annually per worker, according to the study. Employers who now offer coverage would see an increase of $123 per worker, while those who don't offer coverage now would spend another $813 per employee.

Families with one or more uninsured members would see an average increase in annual spending of $1,410.

The number of people covered in employer-sponsored plans would drop by 11 million, while enrollment in private plans would drop by 900,000, the study found.

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Lewin Group report

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McClatchy Newspapers 2009

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