CBO Admits (Very Quietly) That HR 3200 Will Reduce Costs
Published July 26, 2009 @ 11:16PM PT
Since I’m sure we’ll be greeted Monday morning with a chorus of opponents of reform citing the latest Congressional Budget Office pronouncement as proof that we should give up on health care reform, I thought I should call attention to the last two paragraphs of the document. Last week, many took CBO Director Doug Elmendorf’s verbal testimony as proof that the current reform proposals in the House, the Senate and the White House would not appreciably reduce health care costs. What, I wonder, will they make of CBO’s new pronouncement that HR 3200 would “achieve tens of billions of dollars in Medicare savings each year”?
The context: Rep. Steny Hoyer asked the Congressional Budget Office to “score” the proposal to create an independent body modeled on the existing Medicare Payment Advisory Commission. Since this new commission – IMAC – would be staffed with providers and experts, not politicians, they’d be empowered to make policy decisions to reduce Medicare spending unencumbered by political calculation. The President would decide whether to implement their proposals each year as a package deal (no amendment or picking and choosing), and they would become law unless Congress passed a law to put them on ice within 30 days. White House Office of Management and Budget Director Peter Orszag has championed this idea as a way to overcome political inertia and generate long-term savings.
CBO determined there may well be substantial long-term savings, but marginal short-term savings. However, given the furor of last week, it’s striking that part of the reason why Elmendorf and his staff don’t believe IMAC will yield much short-term savings is because their recommendations will likely overlap with provisions in HR3200 that will already be reducing costs. Full quote, with no elisions:
Several percent of annual Medicare spending would amount to tens of billions of dollars per year after 2019. By that point, H.R. 3200, as introduced, would already be on track to achieve tens of billions of dollars in Medicare savings each year, primarily as a result of provisions that would reduce payments to Medicare providers relative to those projected in the current-law baseline. (Total federal resources devoted to health care programs would increase under the introduced version of that bill, however, because of the provisions aimed at making health insurance available to more people.) Substantial additional savings from an IMAC-type proposal would probably require significant changes in coverage, benefit design, and payment and delivery systems aimed at reducing the quantity and intensity of services provided. Some of the savings that could be expected from such changes are probably already captured in CBO’s assessment of the long-term savings that would result from provisions of H.R. 3200, but it is difficult to assess the extent of that overlap.
Something to keep in mind as you hear pundits thundering that the CBO says health care reform won’t reduce costs.
(Photo credit: Kevin on Flickr.)
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Comments (7)
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Tim has been an online organizer and blogger on health care policy for the Obama for America campaign (during the primaries) and currently for the Committee of Interns and Residents/SEIU Healthcare, a labor union for intern and resident doctors. Views expressed here are Tim's, and don't represent the positions of CIR or SEIU.
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Tim,
Do you know why neither Dennis Kucinich nor Bernie Sanders can get the CBO to score HR676? I called Kucinich's office about this but could not get an answer.
It seems bizarre to me that we get an immediate score of HR3200 which has 8 co-sponsors, but the CBO has not scored HR676 with 85 cosponsors.
It seems to me that if we are actually concerned about either fiscal responsibility or universal coverage--or both--HR676 must be thoroughly analyzed and scored by the CBO, and the results made public.
Posted by Carla Rautenberg on 07/27/2009 @ 04:44AM PT
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No idea-- I know many advocates have been asking for a CBO score of HR 676 or of Sen. Sanders bill in meetings with their representatives. But I haven't even heard a rumor that that's moving forward.
Posted by Timothy Foley on 07/27/2009 @ 07:29AM PT
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Uh, wow. That's kind of an important detail, about the overlap. Thanks for the post Tim.
Posted by Paul Drake on 07/27/2009 @ 12:21PM PT
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By 2019 (10 years from now) "would already be on track to achieve tens of billions of dollars in Medicare savings each year"
This doesn't say we will be saving any money... This says that in 10 years we will be "on track" to start saving. The actually "cuts" in spending would not happen for many years after 2019.
Plus, this entales CUTTING the amount that the government will pay Medicare providers... which will DECREASE the number of doctors and service providers that actuallytake Medicare.
Where will seniors go when there are no docs that accept their insurance?
Posted by Andrew Erwin on 08/31/2009 @ 08:53AM PT
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Hi Andrew--
As I'm sure you know, Medicare rates for primary care doctors are increased under HR 3200. That's the main concern for decreasing numbers of physicians who accept Medicare.
And the "cuts" for things like Medicare Advantage plans begin in year one.
It's all in the bill.
Posted by Timothy Foley on 08/31/2009 @ 08:57AM PT
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primarily as a result of provisions that would "reduce payments to Medicare providers" relative to those projected in the current-law baseline.
Posted by Andrew Erwin on 08/31/2009 @ 11:46AM PT
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So the "savings" would be "after" 2019?
Why can't the government do all the so-called "Cost savings' ideas in place now? Government has NEVER cut major fraud and abuse. How can the taxpayers citizens gamble on this a Hope and Pray, we save, to pay for this Insurance Bill?
Where are the actions to cut the cost of Doctors and Hospitals? That is where the $billions originate from.
Posted by Joe Taxpayer on 09/15/2009 @ 08:13AM PT
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