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Obama Administration Report Confirms Democrat Health Law Increases Health Care Spending

April 23, 2010

Last night, the nonpartisan, independent actuaries at the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) released an analysis of the newly enacted Democrat health care overhaul.  Among its many troubling findings, the report concludes that national health care costs will increase significantly over the next decade under the new law.  Below is a summary of the report’s key findings.  

  • Health Care Costs Increase:  “national health expenditures under the health reform act would increase by a total of $311 billion (0.9 percent) during calendar years 2010-2019.” [Page 4]  The actuaries found the law bends the cost curve up by a greater degree than either the House or Senate-passed legislation, despite the Administration’s claim that slowing national health spending was the “single most important” reason to overhaul the health system.  

  • Over One-Half Trillion in Medicare Cuts: The Medicare actuaries found that the new health law cuts “$575 billion” [Page 4] from Medicare.  
  • Seniors’ Access to Care Jeopardized: As a result of the cuts to Medicare, the actuaries found, “absent legislative intervention, [providers] might end their participation in the program (possibly jeopardizing access to care for beneficiaries).” [Page 10]
  • Workers & Seniors Can’t Keep the Health Plan They Have and Like: “We estimate that such actions would collectively reduce the number of people with employer-sponsored health coverage by about 14 million.” [Page 7]  Furthermore, 2 million Americans who currently have employer-provided health coverage will be dumped into Medicaid.  [Page 3]  Additionally, the actuaries predict millions of seniors will lose their Medicare plan because massive cuts to the program will result in, “about 50 percent” of seniors no longer being in a plan. [Page 11].  
  • Long Wait Lines Resulting From A Shortage of Doctors and Hospitals: “For now, we believe that consideration should be given to the potential consequences of a significant increase in demand for health care meeting a relatively fixed supply of health care providers and services.” In other words, Americans should be prepared for doctor and hospital shortages under the new law.  [Page 20]
  • False Promise to Those With Pre-Existing Conditions: “By 2011 and 2012 the initial $5 billion in Federal funding for [high risk pools] would be exhausted, resulting in substantial premium increases to sustain the program.” [Page 16]
  • Massive & Unworkable Entitlement Expansion: “First, an estimated 18 million would gain primary Medicaid coverage as a result of the expansion.” [Page 3]  In addition to burdening both Federal and state budgets, the actuaries caution this expansion will fail to provide meaningful access to health care.  “Therefore, it is reasonable to expect that a significant portion of the increased demand for Medicaid would be difficult to meet, particularly over the first few years.” [Page 20]
  • Millions Will See Their Health Benefits Taxed for the First Time: “It should be noted, however, that an estimated 12 percent of insured workers in 2019 would be in employer plans with benefit values in excess of the thresholds (before changes to reduce benefits) and that this percentage would increase rapidly thereafter.” [Page 13]
  • Budget Gimmicks Revealed: President Obama’s actuaries found that the new government-run long-term care program that Democrats had touted as saving $72 billion dollars over the next ten years, will “face a significant risk of failure.” [Page 15]
  • New “Medicare Tax” Doesn’t Go To Medicare: “The Reconciliation Act amendments introduced a new 3.8-percent “unearned income Medicare contribution” on income from interest, dividends, annuities, and other non-earnings sources for individual taxpayers with incomes above $200,000 and couples filing joint returns with incomes above $250,000.  Despite the title of this tax, this provision is unrelated to Medicare; in particular, the revenues generated by the tax on unearned income are not allocated to the Medicare trust funds.” [Page 9]