CBO: Doc fix will cost more than anyone thought
posted at 3:35 pm on May 5, 2010 by Ed Morrissey
Legislate in haste, repent at leisure. The ObamaCare bill signed by Barack Obama after getting hastily and repeatedly rewritten in backroom negotiations by Nancy Pelosi and Harry Reid turns out to cost a lot more than they admitted — and in new areas that keep appearing after its passage. The CBO now estimates the “doctor fix” that Pelosi and Reid promised to the AMA in exchange for their support will cost much more than the Democratic leaders admitted, emphases mine:
The debate over what to do about Medicare payments to doctors continues. Physicans have been lobbying “to repeal the Sustainable Growth Rate formula, which triggers automatic Medicare payment cuts if spending rises above a certain level,” CongressDailyreports. Those cuts have been put off for years.
On Friday, the Congressional Budget Office said that just freezing current Medicare payment rates to doctors would likely cost nearly $276 billion through 2020, a 33 percent increase from legislation that would “accomplish that goal introduced late last year by Sen. Debbie Stabenow, D-Mich., estimated to cost $207 billion at the time” according to CongressDaily. “Aides on both sides of the aisle attributed the cost increase to assumptions of an improved economy, which tends to add more to the cost of health services, as well as demographic changes that foresee increased numbers of retirees in 2020 over the previous year.”
Democrats would like to pass a “doc fix” bill to stave off the cuts for perhaps as long as five years — at a cost of almost $89 billion — but scheduled cuts are slated to take effect June 1 if nothing is done. “The American Medical Association is continuing to lobby hard for a permanent fix, despite the cost”[.]
Wouldn’t that have been good to know in March? I’m sure Congress will immediately undertake an investigation of how that managed to slip their attention. While they’re at it, they can explain why 18 states opted to avoid the federal high-risk pool:
Eighteen states have said they will not administer a stopgap program to provide insurance coverage to people whose preexisting conditions have left them uninsured, forcing the federal government to do the work.
The states’ decisions increase the challenge the government faces as it sets out to translate the far-reaching health-care legislation into action, and they hint at the complexities to come. …
Most states already have high-risk pools, but they can be prohibitively expensive and they generally do not meet the new federal requirements.
The chief actuary at the Centers for Medicare and Medicaid Services has predicted that the $5 billion allotted for the new program will run out as early as next year.
We covered that shortfall earlier, when Kathleen Sebelius admitted to Congress that HHS has no idea how much that program will cost. Meanwhile, another $5 billion program may run out of money sooner than expected — a subsidy that gives employers incentives to keep early retirees on their plans:
Trying to entice cost-weary employers to keep providing medical coverage to early retirees, the Obama administration is making $5 billion available until the safety net of the new health care law is in place. …
Preventing an immediate rush to the exits by employers is one of the main goals of the new subsidy program, authorized under the health care overhaul law. Among employers with 500 or more workers, only 28 percent offer health benefits to early retirees, down from 46 percent in 1993, according to Mercer, a benefits consulting firm.
Under the program, employers can get reimbursed for up to 80 percent of the cost of medical claims between $15,000 and $90,000 for their early retirees. The government payments can be used to reduce premiums for retirees and their dependents, or by employers to keep their own costs in check. The benefit takes effect June 1.
Large companies and labor unions successfully lobbied to include the early retiree subsidy in the broader health overhaul. Nearly 2 million people ages 55-64 currently have health insurance through a former employer.
Congress set aside $5 billion to finance the benefit until Jan. 1, 2014, but it’s unclear how long the money will last. Employers are expected to sign up without delay.
In other words, the price to get the AMA’s backing of ObamaCare turns out to be 33% more than estimated at the time, assuming Congress actually enacts it. Two of the programs designed to allow the Obama administration to delay implementation until 2014 (and therefore skew the cost estimates in the first decade) may not have enough money to last more than a year. Normally, these are the kinds of issues that Congress resolves before making law.
From now on, just assume that anything a Democratic Congress produces will be costlier than anyone admits, and that their leadership probably hasn’t even bothered to calculate the real costs of it.