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Wonks war over health bill's cost impact

December 16, 2009

As the horse-trading focuses on a Medicare expansion and public option—both of which appear to be on the way out—a rhetorical battle is raging on whether ObamaCare will help or hike costs.

Obama’s own Medicare actuary fired a torpedo at the Senate bill last week, issuing a 34-page report predicting total national health expenditures would rise slightly more under health reform than if nothing were done. The actuary, Richard Foster, also said some of the planned Medicare savings may be “unrealistic.” Read his report here.

Republicans—who have actually tried to block the Medicare cuts in the Senate bill—still seized on Foster’s report to buttress their calls for scrapping the bill and starting over.

Sen. Chuck Grassley (the Iowa Republican who used to be friendly with the Democrats on health care) then piled on with a lengthy analysis on how subgroups of the middle class would fare under the Senate health care bill when all premium subsidies, tax increases and changes to premium costs are factored in.

His conclusion? For those making less than $200,000 a year, about 11 percent will save money, while 41 percent will lose money. You can see Grassley’s findings here.

On Monday, the White House responded. Obama’s Council of Economic Advisers issued a 14-page report estimating the Senate health bill would achieve savings in Medicare and Medicaid of 1 percent per year for both the public and private sectors. You can read the report here.

And Obama Budget Director Peter Orszag fired back at a searingly critically Wall Street Journal editorial, saying the Senate bill puts in place programs and an independent commission that will achieve cost-saving reform over time.

“Even after passage,” Orszag wrote on his blog, “we will need a continuous assessment of what works and what doesn’t and rapid adjustments to a changing market—all of which can be done with the mechanisms laid out in this bill.” Read his blog post here.

But with Senate moderates such as Joseph Lieberman forcing out some of the more liberal elements of ObamaCare—such as the public option, the extension of Medicare to those as young as 55, and the removal of lifetime claim caps on private insurance—some liberal groups have joined conservatives in carping on costs and calling for the bill to be scrapped.

“Although reform will nominally provide coverage for a portion of the uninsured (falling far short of the goal of universality), it will compound the affordability problem for middle-income Americans through inadequate controls on cost escalation, higher taxes and higher premiums and out-of-pocket expenses (the opposite of what we were promised),” wrote Dr. Don McCanne, an advocate of a single-payer system, on his blog, which you can read here.

McCanne’s advice? “We need to dump the current proposal and immediately move on with a reform process that will establish a bona fide social insurance program within the United States.”

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