Let's Review

March 30, 2011

During the House Energy and Commerce Health Subcommittee hearing today, Congressional Budget Office Director Doug Elmendorf and the Centers for Medicare and Medicaid Services Chief Actuary Rick Foster provided insight into the true cost of the health care law, including the effects on private policies, the federal deficit, and medical devices.

Health Care Law Increases Cost for Privately Insured

Transcript
Rep. Bill Cassidy (R-LA): This bill through its cost shifting mechanism drives up the cost for privately insured.

Foster: Yes.

Medicare Cuts "Not Sustainable"Without Cuts, Not the Same Deficit Reduction

Transcript
Foster: These payment reductions, or these slower growth in payment rates, won't be sustainable in the long term. If that happens, then the savings that are generated by those won't occur because you all will have to override them to prevent problems with access.

Elmendorf: If those Medicare cuts or savings do not ultimately come to pass, then the deficit reduction affect of PPACA plus whatever future legislation took back those cuts, that combination of law would not have the same affect on reducing budget deficits that we estimate PPACA to have by itself.

No Cost Estimate Available Prior to Health Care Vote

Transcript
Rep. Michael Burgess (R-TX): Do you feel we had the full picture March 21, 2010, when this vote was called on the floor of the house?

Foster: The legislation was complicated. It took our team working on this some period of time. From the time we got the legislation until to the time we could produce an estimate we were comfortable with.

Burgess: Were you able to convey to the Speaker of the House that information that you did not have a figure you were comfortable with prior to Congress taking a vote on something of this magnitude?

Foster: The Speaker of the House did not ask us. Various members of the House and Senate did ask us from time to time, could we have something? Could we have it prior to the vote that was scheduled? I think in all instances we were not able to produce our estimates to complete them before the vote actually occurred. Our goal was to do that, but it was too hard within the time available.

Burgess: But it's not like the train was going to run off the railroad bridge if the vote did not happen on March 21. We could have voted on April 21, could we have not? And had time for your independent technical advice?

Foster: If the vote were delayed, clearly yes that would have been available.

Burgess: In retrospect, could we have benefitted from having your opinion on the cost of this legislation?

Foster: On a good day I think our advice is useful.

Medical Device Tax Will Be Passed on to Consumers

Transcript
Rep. Leonard Lance (R-NJ): The 2.3 percent excise tax on medical devices, do you anticipate these and excise taxes would generally be passed through to health consumers in the form of higher prices and higher insurance premiums? As I understand it they'd be placed on devices like pace makers.

Foster: Yes, we think that will be the typical reaction will be to raise the prices of the products to cover the higher costs associated with the fees of the taxes.

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