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Health Care Reform Could be Too Expensive to Pull Off

As Congress grapples with how to feasibly pay for a serious overhaul of the nation’s health care sector, which makes up nearly 17 percent of the U.S. gross domestic product, health economist James Capretta urged the American public to keep an eye on the country’s annual growth rate of retirement.

“Baby boom retirement is going to have a huge impact on health care costs over the long run,” Capretta said today at a Heritage Foundation-sponsored reporter roundtable. “It’s already a very explosive budgetary situation that we’re in. That’s the context in which health reform is being discussed,” said Capretta, a fellow with the Ethics and Public Policy Center.

Already, the federal government runs two health entitlement programs (Medicare for the elderly and disabled and Medicaid for the poor) that have been growing faster than GDP virtually every year since their inception in 1965, Capretta said. “We’re now about to create another entitlement that is absent of any forward-thinking budget decisions that are hard and controversial,” he noted.

Last week’s $1 trillion price tag for Sen. Edward Kennedy’s health care legislation “rocked” Congress, with the Senate Finance Committee scrambling to redraft its legislation to offer a budget-neutral reform plan. Some health care experts question if reform efforts will now “crash and burn” after the sticker shock of the Congressional Budget Office’s estimated cost for Kennedy’s bill — especially since this estimate didn’t include any projected costs for a public health insurance plan.

But Len Nichols, director of New America Foundation’s health policy program, said the price tag is just about right to give health coverage access to the roughly 46 million uninsured Americans. “It’s a 10-year number that when you divide out with the GDP is about .8 percent of it,” he said at the reporter roundtable. While advocating that Congress can’t “write a blank check on health reform,” Nichols argued the cost of doing nothing would be greater down the road.

In an effort to put more cost savings on the table, Capretta noted that President Barack Obama has proposed cutting Medicare and Medicaid reimbursement rates for doctors, hospitals and other health care providers by an additional $313 billion over 10 years. Those cuts come on top of $309 billion President Obama called for in his 2010 budget to Congress, creating a total $622 billion reduction in Medicare and Medicaid reimbursements over the next decade.

The proposed reductions signal how the government would finance a public health insurance plan offered to Americans younger than 65, Capretta said. “These across-the-board cuts would mean every licensed provider would be paid the same.” Squeezing out these kinds of savings from Medicare alone could jeopardize senior citizens’ access to doctors and prescription drug choice.

Whatever solution Congress does decide upon to pay for health care reform, it will need broad bipartisan support, Nichols said. “If one side demands a certain budget on health care spending that’s not bipartisan, the other side will scream bloody murder.” Without bipartisanship, “health care reform is totally vulnerable.”


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