In a comment on my previous post on
the Senate Health, Education, Labor, and Pensions reform bill, tcoyote
explained some of the political thinking behind what seem like totally
spurious cost projections. While I can readily accept tcoyote’s explanation
of the pols’ efforts to ignore reality, I’m still politically innocent
enough to want to know what the HELP bill might really cost. So I spent
some time looking at the Congressional Budget Office report on the bill. 

Here are a few things I noticed: 

  1. The “ten-year projection”
    starts in 2010, although the bill does not require insurance exchanges
    to be implemented until 2014. The result is that the projection includes
    only six years of reform (plus a lengthy transition period), NOT ten
  1.  The CBO projections
    include a $58 billion “credit” for the impact of the HELP bill’s
    proposed new long-term care program (the so-called CLASS Act). However,
    the “credit” accounts for the difference between premiums and benefits
    over the 2010-2019 period on a cash basis only. If conventional accrual
    accounting were used, CLASS would show a net cost for the period.

  1. The number of individuals
    eligible for the proposed Medicaid expansion is projected to be 26 million,
    not the 20 million implied by Senator Dodd in his news conference on
    behalf of the HELP Committee.>
  1. The CBO estimates include
    no allowance for medical inflation, except in terms of increased subsidies
    for lower-income exchange participants.
  1. The CBO assumption that
    the absurdly low levy for play-or-pay “payers” will not cause any
    significant migration from employer sponsorship to the exchanges seems
    wildly unrealistic (as I’ve already commented).

The bottom line is that a realistic
ten-year projection of the costs of the fully-implemented HELP bill
plus Medicaid expansion would be somewhere between one and a half trillion
and two trillion dollars. (And still with eight million or more uninsured). 

It’s disappointing to see the CBO
apparently getting suckered into putting a favorable slant on the numbers
(Senator Dodd noted that he’d put a lot of pressure on CBO Director
Doug Elmendorf). Hopefully, CBO’s subsequent scoring of the HELP Committee’s
efforts (along with Senate Finance’s Medicaid expansion) will provide
a more realistic picture. 

Meanwhile, how about looking at ways
to control costs other than the public plan (which as envisioned by
the HELP bill will depend on the willingness of providers to participate,
at government-set payment rates, potentially creating another version
of Medicaid)?

Roger Collier was formerly
CEO of a national health care consulting firm. His experience includes
the design and implementation of innovative health care programs for
HMOs, health insurers, and state and federal agencies.
He is editor of