Medicare Report Shows ObamaCare’s Harmful Budgetary Impact

Grace-Marie Turner
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Posted: May 06, 2010 8:49 AM
Medicare Report Shows ObamaCare’s Harmful Budgetary Impact

Many Americans wondered why Congress was in such a rush to take the final vote on ObamaCare at midnight on a Sunday night when most of its major programs don’t begin until 2014. It’s now clear that Democratic leaders feared their members might balk if they saw the objective analysis that was being prepared showing the overhaul law’s true costs.

Their concerns were validated when a respected, non-partisan analyst issued a report one month after the law was enacted. The chief actuary for Medicare, Richard Foster, found that under ObamaCare, health spending and health costs will rise, businesses and families will face higher premiums, millions of people will lose their current coverage, and seniors will have trouble accessing care.

Michelle Malkin

The analysis by the administration’s own actuary confirms why a majority of Americans opposed the legislation and why House Republicans want Foster to testify about his findings.

Foster’s analysis already has had an impact on decisions regarding one of the first programs launched under ObamaCare – the new temporary high-risk pools for the uninsured. Congress allocated $5 billion to fund the pools until 2014 when enrollees would be transferred into new health insurance exchanges.

But Foster found that the $5 billion “would be expended during the first 1 to 3 calendar years of operation.” That means states could have to fill the funding void. Nineteen states told HHS Secretary Kathleen Sebelius, “No thanks” when she asked if they planned to run these new programs.

The states don’t want to be responsible for the added cost of the federal high-risk program and wisely chose to protect their taxpayers from yet another unfunded liability. As a result, HHS will now be responsible for creating and operating risk programs in these 19 states.

They wisely told Sebelius who is in charge and that they will not be subservient to Washington.

Now that Foster’s report is out, the White House spin can’t hide the fact that ObamaCare is an abject failure at achieving its number one goal: reducing health care costs. Foster’s analysis estimates that total national health spending will increase by $311 billion as a result of ObamaCare, thereby bending the cost curve up.

He also predicts higher health insurance premiums for individuals and businesses because billions of dollars in new fees and excise taxes will “generally be passed through to health consumers in the form of higher drug and devices prices and higher premiums."

Foster warns that the cost of the health overhaul law may be much greater than advertised. It relies on more than $500 billion in Medicare cuts to help pay for the new entitlement spending. But these cuts “may not be fully achievable” because “Medicare productivity adjustments could become unsustainable even within the next ten years,” Foster wrote. Given Congress’s inability to address Medicare’s exploding costs thus far, Foster’s skepticism is justified.

The report also highlights the shaky financial footing of the new long-term care insurance program – the CLASS Act, which Sen. Kent Conrad (D-ND) has described as “a Ponzi scheme of the first order.” Foster agrees the program faces “a significant risk of failure,” resulting in “a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.” At a time of ballooning deficits and record debt, he finds the program will result “in a net Federal cost in the long-term.”

Concerned you’ll be kicked off your health insurance plans due to ObamaCare? Foster’s report shows that millions of Americans will suffer just this fate. He estimates that 14 million people will lose their employer coverage by 2019 as smaller employers terminate their plans and as workers who currently have employer plans enroll in taxpayer-subsidized coverage.

For seniors, Foster estimates that more than seven million will lose their current Medicare Advantage plans and that the “new provisions will … result in less generous benefit packages.” Recipients on traditional Medicare also will have trouble accessing care: Fifteen percent of all hospitals, nursing homes and other providers treating Medicare recipients could be operating at a loss by 2019 and “possibly jeopardize access to care for beneficiaries.”

He also warns that there simply is not enough capacity in the system, especially at government payment rates, to provide actual medical care for the newly insured: “The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.”

Unfortunately, the White House and congressional leaders are unlikely to address the damaging findings in Foster’s analysis. When Americans begin to feel the impact, they will see there was independent evidence of the false promises proponents made to gain votes to enact this unpopular legislation.