Medicare official doubts health care law savings

[January 27, 2011]  WASHINGTON (AP) -- Two of the central promises of President Barack Obama's health care overhaul law are unlikely to be fulfilled, Medicare's independent economic expert told Congress on Wednesday.

The landmark legislation probably won't hold costs down, and it won't let everybody keep their current health insurance if they like it, Chief Actuary Richard Foster told the House Budget Committee. His office is responsible for independent long-range cost estimates.

Foster's assessment came a day after Obama in his State of the Union message told lawmakers that he's open to improvements in the law, but unwilling to rehash the health care debate of the past two years. Republicans want to repeal the landmark legislation that provides coverage to more than 30 million people now uninsured, but they lack the votes.

Foster was asked by Rep. Tom McClintock, R-Calif., for a simple true-or-false response on two of the main assertions made by supporters of the law: that it will bring down unsustainable medical costs and will let people keep their current health insurance if they like it.

On the costs issue, "I would say false, moreso than true," Foster responded.

As for people getting to keep their coverage, "not true in all cases."

The comments Wednesday were unusually direct because Foster generally delivers his analysis in complicated technical memos.

The White House responded to Foster's testimony in a blog post by Stephanie Cutter, a top aide helping to guide the political strategy on health care. "Once again, we disagree," Cutter wrote. "History shows that it is possible to implement measures that will save money for Medicare and the federal government."

Foster was a thorn in the side to the administration throughout the health care debate, doubting that Medicare cuts would prove to be politically sustainable and raising other questions. An equal-opportunity skeptic, he was also a bane to the George W. Bush administration during the debate that led to creation of the Medicare prescription drug benefit in 2003.

Obama White House officials predict that Foster will be proven wrong about the health care law. Republicans hang on his every word.

Foster said analysis by his office shows that the health care law will raise the nation's health care tab modestly because newly insured people will be getting medical services they would have otherwise gone without.

Costs could also increase if Medicare cuts to hospitals, nursing homes and home health agencies turn out to be politically unsustainable over the years.

The actuary's office has projected those cuts would eventually force about 15 percent of providers into the red. The health care law funnels savings from the Medicare cuts to provide coverage to uninsured workers and their families.

As for people getting to keep their health insurance plan, Foster's office is projecting that more than 7 million Medicare recipients in private Medicare Advantage plans will eventually have to find other coverage. That would cut enrollment in the popular plans by about half.

Money is again the reason. The health care law gradually cuts generous government payments to the plans, so Foster expects insurers to raise premiums or even drop out. The main reason seniors have flocked to the private plans is that they offer lower out-of-pocket costs. If that reverses, it could trigger an exodus.

Medicare recipients would still be guaranteed coverage in the traditional program, but they would likely have to take out supplementary insurance for gaps in the benefit.

[Associated Press; By RICARDO ALONSO-ZALDIVAR]

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