What The CMS Report Tells Us About The House Health Bill
What The CMS Report Tells Us About The House Health Bill
On Friday, the Center on Medicare and Medicaid Services (CMS) released a new “estimate of the financial and coverage effects of the non-tax provisions” in the House health care bill. According to the report, “total national health expenditures in the U.S. during 2010-2019 would increase by about 0.8 percent.” The cost-containment measures in the bill “would not have a significant impact on future health care cost growth rates”:
The increase in total NHE is estimated to occur primarily as a net result of the substantial expansions in coverage under H.R. 3962, together with the expenditure reductions for Medicare…..The availability of coverage would typically result in a fairly substantial increase in the utilization of health care services, with a corresponding impact on total health expenditures. These higher costs would be partially offset by the sizable discounts imposed on providers by State Medicaid payment rules, together with the significant discounts negotiated by private and public health insurance plans.
Higher utilization from the additional 34 million newly insured enrollees will bend the cost curve slightly up, and, with the exception of the proposed reductions in Medicare payment updates for hospitals, the bill does not do enough to manage utilization or the cost of health care services, the report concludes. It’s a valid point, and one that the Senate health care bill will address with an excise tax on Cadillac health care plans and a Medicare Commission tasked with controlling Medicare-related spending. CMS doubts that the health care industry could “improve their own productivity to the degree achieved by the economy in large” and predicts that the productivity adjustments in the House bill could lead some Medicare providers “for whom Medicare constitutes a substantive portion of their business” to stop seeing Medicare patients.
But the report is not without its positives, and lawmakers must accept the bad with the good. If the CMS analysis suggests that reform legislation should adopt robust cost-containment provisions, it also applauds the bill for expanding coverage by building and strengthening the current public/private system. The report is a wake-up call for reformers as much as it is a full and complete rejection of critics who argue that the House bill will undermine the existing health care system:
- The bill covers 34 million Americans.
- Overall out-of-pocket spending would decline more than $200.
- It extends the life of the Medicare trust fund by 5 years until 2022.
- It invests in comparative effectiveness research without “rationing care.” Such research will reduce national health expenditures by $8 billion between 2010 and 2019.
- The number of Americans in employer-sponsored coverage will increase by 2.5 million.
- Rather than crowding-out private insurers, the public plan would compete on a level playing field and attract about 6 million enrollees. (The report concludes that public plan premiums would be 4% higher than private because it would attract sicker applicants)
- Public expenditures could rise by just 3 percentage points in 2019, or stay the same. Expenditures from private health insurance could actually increase.
- Under the bill, expenditures through Medicare and Medicaid would reduce national health expenditures by roughly 2.1% in 2019.
The CMS report confirms that the House health care bill is a fairly modest proposal that expands access to insurance and builds on what works in the current system. Now, honest lawmakers — who believe in health care reform — must ensure that reform also lowers costs for families and reduces long term health care spending.
Rather than complain about a fictitious government takeover of health care and rationing care to seniors, Sens. Olympia Snowe (R-ME), Susan Collins (R-ME), Joe Lieberman (I-CT) and other ‘moderate’ lawmakers should use this report to insert stringent cost-control mechanisms into the final bill. The report relieves them of their deepest fears (and Luntz-inspired talking points) and challenges them to address the real problems in the health care reform bill.
10 Responses to “What The CMS Report Tells Us About The House Health Bill”
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Igor,
I hope you don’t mind my repeating my question to you. It might seem hypothetical, but I do mean it literally: Given the much lower costs associated with universal coverage due to the 40% savings from appropriate universal preventative care (not to mention the lifespan premium) is there any reason to expect that universal coverage will not be added during budget reconciliation conference committee?
I really am interested in your thoughts on universal coverage and its chances during the budget reconciliation process.
November 15th, 2009 at 10:55 amEmployer sponsored coverage will expand by 2.5 million?
I have serious reservations about that assumption. Consider history. Employer coverage is down from covering 70% of all Americans. It’s now in the high 50%. Take the last Census report on the uninsured:
Between 2007 and 2008, the number of people covered by private health insurance decreased from 202.0 million to 201.0 million, while the number covered by government health insurance climbed from 83.0 million to 87.4 million. The number covered by employment-based health insurance declined from 177.4 million to 176.3 million.
The only thing I saw potentially reversing the long downward trend is a $20 billion subsidy for employers/unions expanding coverage. It was in an earlier bill (Senate).
The final bill will be most telling.
November 15th, 2009 at 2:51 pmRather than crowding-out private insurers, the public plan would compete on a level playing field and attract about 6 million enrollees. (The report concludes that public plan premiums would be 4% higher than private because it would attract sicker applicants)
Level playing field? Hardly. There will be at least three levels of targeted “sickness.”
1. Non exchange individual plans (marketed to most healthy)
2. Exchange individual plans (more expensive as healthy skimmed off)
3. Public plan (4% more expensive than #2 according to CMS)
There is no level playing field, not with the For-Profiteers.
November 15th, 2009 at 3:04 pmPost #2, the correct size of the subsidy is $10 billion, not $20 billion. That’s what I get from trying to go off memory.
http://stateofthedivision.blogspot.com/2009/08/health-reforms-10-billion-subsidy-for.html
November 15th, 2009 at 3:20 pmHere are the Census Bureau stats on Employment based insurance and its percent of Americans covered:
1999: 70.4%
http://www.urban.org/publications/310849.html
2008: 58.3% (Figure 7)
http://www.census.gov/hhes/www/hlthins/hlthin08/hlthfigs08.html
Health reform allows this trend to continue. There is no employer mandate. If businesses need to shed costs to compete in a global economy, health insurance is a prime candidate for the dump. Reform paves the way.
November 15th, 2009 at 3:44 pmIgor, did you read the report?
2008 176.3 million (Census data)
2019 168.4 million (under House bill)
That’s a 7.9 million decrease in employer sponsored coverage.
November 16th, 2009 at 2:25 pmThere’s more to the story. CMS predicts 11.9 million people will lose employer coverage by 2010.
176.3 million 2008 (Census bureau)
164.4 million 2010 (CMS peojection under House bill)
A fall of 11.9 million from the rolls.
This fact is conveniently omitted from the analysis.
November 16th, 2009 at 5:54 pmThe better title would be CMS predicts employer health insurance carnage in 2009-2010.
November 16th, 2009 at 6:11 pmThe report relieves them of their deepest fears (and Luntz-inspired talking points) and challenges them to address the real problems in the health care reform bill.
whaaaa???? that would require honesty and integrity, something snowe, collins, and LIEberman wouldn’t know about if it hit them in the face with an MRI machine.
November 16th, 2009 at 7:11 pmYes, this most recent assessment should serve as a call to action to make cost containment a more integral part of our bill. As stated on page 16 of the CMS’ actuarial report, “The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, changes in providers’ willingness to treat patients with low-reimbursement health coverage.” Only a new vision of payment reform and cost-containing care processes can battle this jolt to the system – we must make sure that the final bill takes that important step toward creating a more sustainable, healthy system for all.
November 18th, 2009 at 11:45 am