Public Option Would Add $1 Trillion to Deficit

John Commins, for HealthLeaders Media , September 9, 2009

The long-term cost to the federal government of a healthcare reform bill that includes a public option health plan would add $1 trillion to the deficit between 2020 and 2030 because healthcare costs would outpace revenues, according to new estimates by The Lewin Group.

The report, Long-Term Cost of the American Affordable Health Choices Act of 2009: As Amended by the Energy and Commerce Committee in August 2009, found that America's Affordable Health Choices Act of 2009 (HR3200) would constrain the growth in the federal government's healthcare costs to about $39 billion between 2019 and 2019, but would fail to keep costs from growing faster than funding sources in the long-term, beyond the normal 10-year budget projection period.

The Lewin Group, which is owned by United Healthcare Group, one of the country's health insurers, also estimates that:

  • 30 million people would gain insurance coverage in 2011 under the act, which would reduce the uninsured population by 60%.

  • 41 million people would obtain health insurance through newly-created health insurance exchanges, including 21 million in the public plan. Medicaid enrollment would grow by 10 million.

  • Families in which all members now have insurance would save an average of about $176 under the reforms, 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 now offer insurance would see an increase in health spending of $123 per worker, while employers that do not now provide coverage would see an increase averaging about $813 per worker. The study notes that most economists believe that employers would offset the cost increases with slower wage growth. As a result, families and individuals would ultimately bear the burden of higher healthcare costs. Small businesses that now provide 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.

  • The Act would result in a net savings to state and local governments of about $62.6 billion from 2010 through 2019, due to savings in safety-net programs. States would save about $125.7 billion over the 2020 through 2029 period.

John Commins is a senior editor with HealthLeaders Media.

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