Peter G. Peterson Foundation Releases The Lewin Group Study Showing Current House Health Care Reform Proposal Would Lead to Expanded Coverage and Higher Costs

NEW YORK, Sept. 9 /PRNewswire/ -- A mixed picture emerges from a new study commissioned by the Peter G. Peterson Foundation on America's Affordable Health Choices Act of 2009 (H.R. 3200). The study, conducted by The Lewin Group, provides a critical look at longer-term cost implications of a major comprehensive health care reform proposal, estimating the impacts through the year 2029, making it the first analysis of health care reform costs beyond 2019. The study examines the House legislation as amended by the Energy and Commerce Committee. The Foundation plans to commission similar analyses of other major reform proposals, including the one from the Senate Finance Committee, as legislation is introduced.

For the full Press Release, including Highlights of the Study, please visit:

http://pgpf.org/resources.dyn/PGPF-Health-Care-Study-Release.pdf

For the full Report, please visit:

http://pgpf.org/resources.dyn/PGPF-Health-Care-Report.pdf

By extending beyond the traditional 10-year budget projection period, the study provides important insights into the key issue that must be addressed in health care reform -- that is, how to keep health care costs from growing faster than the financing available to support them, while also assuring adequate access to quality health care.

"This nation needs to engage in comprehensive health care reform that will include some level of universal coverage. At the same time, this study shows that the top priority needs to be reducing total health care costs and the rate of increase in future costs. For health care reform to be fiscally responsible, it must not just pay for itself over 10-years and beyond, it should also result in a significant reduction in the tens of trillions of dollars in the federal government's unfunded health care promises," said David M. Walker, President and CEO of the Foundation.

The Lewin Group study, Long-Term Cost of the American Affordable Health Choices Act of 2009: As Amended by the Energy and Commerce Committee in August 2009, finds that the legislation would expand health insurance coverage and reduce the number of people who are uninsured. However, the analysis also shows that overall health care costs will increase, not decrease, as a result of expanded coverage and other provisions in the legislation. From the perspective of the federal budget, the study shows the Act would nearly achieve President Obama's goal of paying for itself over the next 10 years. In the second 10 years, however, the proposal would add an estimated $1 trillion to the federal deficit.

Key findings include:

  1. The net federal cost of the Act over the 2010 through 2019 period would be $39 billion (excluding debt service costs) and, thus the Act would be nearly fully funded as reforms phase in during the first ten years. The net federal cost of the Act over the following ten years (2020 through 2029) would be $1.01 trillion (excluding debt service costs) due to rapid growth in health care costs that will outpace the growth in incomes and revenues over the longer-term.
  2. The study estimates that under the Act (assuming full implementation and mature enrollment) almost 30 million people would gain insurance coverage in 2011, a reduction of 60 percent in the ranks of the uninsured.
    • 41 million people would obtain health insurance through newly-created health insurance exchanges, including 21 million in the public plan. Enrollment in the Medicaid program would grow by 10 million.
    • Families in which all members currently have insurance would save an average of about $176 under the Act, while families with one or more uninsured members would, on average, see an increase in family health spending of $1,410 per family.
    • Overall, employer health spending would increase by an average of $305 per worker. Employers that currently offer insurance would see an increase in health spending of $123 per worker, while employers that do not now offer coverage would see an increase in health spending by an average of about $813 per worker. (However, most economists believe that employers would eventually offset the increases in costs through slower wage growth. As a result, families and individuals would ultimately bear the burden of higher health care costs, which is reflected in the bullet immediately above.) Small businesses currently providing insurance would save up to an average of $811 per worker due to a tax credit.
    • The number of people covered in employer-sponsored plans (outside of the health insurance exchanges) would fall by 11 million, and overall enrollment in private plans would decline by about 900,000.
  3. The Act would result in a net savings to state and local governments of about $62.6 billion over the 2010 through 2019 period, primarily due to savings in safety-net programs that currently serve the uninsured. States would save about $125.7 billion over the 2020 through 2029 period.

Susan Tanaka, the Foundation's Director of Citizen Education and Engagement served as the Foundation's liaison for The Lewin Group study. Susan has extensive budget and policy-related experience, including with the Office of Management and Budget and the Congressional Budget Office.

Since its launch in July 2008, the Peter G. Peterson Foundation has invested nearly $11 million in grants to raise awareness of, and seek solutions to the fiscal challenges posed by the rising costs of health care and retirement and a near-zero household savings rate. To address these challenges successfully, the nonpartisan Foundation works to bring Americans together to find sensible, long-term solutions that transcend age, party lines and ideological divides. The Foundation also distributes the critically acclaimed feature documentary I.O.U.S.A., which tells the story of the rapidly growing national debt and its consequences for the U.S. economy. For more information, see www.PGPF.org.

SOURCE Peter G. Peterson Foundation



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