When he addresses Congress tonight, one of President Obama's central tasks will be to convince Americans that he’s serious about controlling health costs. Of course, the president already claims that he is. He's repeatedly emphasized the need to rein in runaway health spending, which he rightly portrays as increasing federal budget deficits and depressing workers' take-home pay. The trouble: many, if not most, experts don't believe him. Aside from rhetoric, they don't find much in Congress's various bills that would reduce the torrid pace of health spending.
Obama's task won't be made easier by a new report concluding that H.R. 3200—the main “reform” bill in the House—would increase government and private health spending over the next two decades. Here's what the study finds:
- The bill would reduce the number of Americans without health insurance by more than half, from an estimated 49 million in 2011 to 19.5 million.
- However, health spending would rise from an estimated 17 percent of gross domestic product (GDP)—the economy's total output—in 2010 to 28 percent in 2029 (that's actually slightly higher than what's predicted if no changes are made to the current system).
- Initially, higher taxes would cover higher government health spending, with budget deficits rising only slightly ($39 billion from 2010 to 2019), but after that, extra health spending would overwhelm new taxes, pushing up deficits by about $1 trillion from 2010 to 2029.
The study was conducted by the Lewin Group, a consulting firm that is owned by one of the nation’s largest health-care insurers, UnitedHealth Group, and was commissioned by the Peter G. Peterson Foundation, an organization focused on budget deficits and rising federal entitlement spending for the elderly. "For health-care reform to be fiscally responsible, it must not just pay for itself over 10 years and beyond," said David Walker, former head of the Government Accountability Office and now president of the foundation. "It should also result in a significant reduction in the tens of trillions of dollars in the federal government's unfunded health-care promises."
All this highlights a dilemma for Obama. To much of his Democratic base, health-care reform means achieving the longstanding liberal goal of universal health insurance, or something close to it. But that costs more money. Meanwhile, many Americans want to spend less money on health care, because they fear higher premiums, out-of-pocket expense,s or taxes. In a recent opinion survey by the Kaiser Family Foundation, 51 percent of respondents said that health-care reform should expand insurance, and 49 percent favored tougher cost control. (People could choose more than one answer.)
Until now, Obama has tried to navigate around the dilemma by condemning high health costs but backing congressional proposals that mainly provide more coverage. Under H.R. 3200, the government would require most Americans to have health insurance and most businesses to provide it or pay a special tax, equal to 8 percent of payroll. Poorer Americans would either qualify for coverage under an expansion of Medicaid or, if they didn't receive insurance directly from their employers, could buy it on an "exchange" where competing plans—including a so-called public plan managed by the government—would be offered. People entitled to use the exchange could qualify for diminishing federal subsidies until their incomes reached four times the government's poverty line (or $88,000 for a family of four). Companies could also pay for their workers to buy insurance on the exchange.
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