Senate Health Bill Would Cause National Health Costs to Rise

From the Wall Street Journal, "Report: Senate Health Bill Will Raise Costs":

Republicans on Friday seized on a report by government actuaries that said the Senate health bill would cause national health costs to rise.

The report, compiled by the chief actuary at the Centers for Medicare and Medicaid Services, estimated that total health costs in the U.S. would be $234 billion higher than if the bill weren't passed. President Barack Obama has said Democrats' health plan would reduce the growth of health-care costs.

Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee, said Democratic lawmakers were spending large sums in the health-care bill "to make things worse." Senate Minority Leader Mitch McConnell (R., Ky.) said the report "confirms what we've known all along," arguing that the bill would "increase costs, raise premiums and slash Medicare." Democrats cited some parts of the report that were more favorable to the bill.

The report said measures in the bill to restrain Medicare costs and trim generous insurance plans "would have a significant downward impact on future health care cost growth rates," but said those gains would be outweighed in the initial years as newly insured people sought to get more health care.

"This report is yet another clear indicator that we have to act, and act now," said Sen. Max Baucus (D., Mont.), the chairman of the Finance Committee.

The report said 33 million more U.S. citizens and legal residents would be insured under the bill, resulting in 93% of Americans with health-insurance coverage. But it said the new demand for health care caused by the bill could prove "difficult to meet initially" because doctors and hospitals would charge higher fees in response to the new demand. The report also said the bill's proposed cuts in Medicare spending "may be unrealistic."

In addition to expanding coverage, the Senate bill creates a long-term-care insurance program that would provide a daily subsidy for those with disabilities and illnesses who require home-based care. The report cited a risk of "adverse selection," saying people who were more likely to require care would be more likely to use the new insurance. That could cause insurance payouts to exceed premium revenue.

"There is a very serious risk that the problem of adverse selection would make the [long-term-care insurance] program unsustainable," the report said.

Also, from The Hill, "Independent healthcare cost analysis becomes political football" (via Memeorandum).

The full report is here.