White House Trumpets Cost Controls in Legislation

Janice Simmons, for HealthLeaders Media , November 30, 2009

As the Senate begins the floor debate on the healthcare reform bill, one issue that will be threaded through the debate is how effective reform measures will be in containing healthcare costs.

In its review of the bill earlier this month, the Congressional Budget Office (CBO) said that enacting the Senate Patient Protection and Affordable Care Act would result in a net reduction in federal budget deficits of $130 billion over the 2010-2019 period.

But are the cost-containing mechanisms there? In a media conference before the Thanksgiving holiday, Office of Management and Budget Director Peter Orszag said the Senate bill moves in the cost-cutting direction, and cited a recent letter from a group of 23 economists supporting that direction by meeting four pillars of reform:

  • Deficit neutrality or budget neutrality over the next decade.

  • The excise tax on high end insurance policies that will raise revenues, but curtail growth of higher-cost plans

  • A Medicare commission to improve quality and contain costs.

  • Delivery system reforms aimed at efficiency

Nancy Ann DeParle, head of the White House's Office of Health Care Reform, went so far to say that the changes in the Senate bill will turn out to "be broader and deeper than what CBO and OMB predictions are.

In a separate move, the cost-containment discussion got an additional boost with release of a letter by Jonathan Gruber, a Massachusetts Institute of Technology economist, who said in a study that showing the Senate bill would slash hundreds of dollars from annual insurance premiums in the individual market.

In a letter to Senate Majority Leader Harry Reid (D-NV), Gruber wrote that CBO also projected that the cost of an individual policy in the non group market would be $5,500 without reform, but $4,460 with reformmdash;or 20% less.

Critics of the cost-containment provisionsmdash;such as America's Health Insurance Plansmdash;have their doubts. Karen Ignagni, AHIP's president, said the Senate bill needs to go further to encourage systemwide cost-containment.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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