CBO: Good news, bad news on Republican healthcare plan

November 5, 2009

The Congressional Budget Office, Congress’ non-partisan score keeper on the cost of legislation, has some good news for Republicans and the alternative healthcare proposal they plan to offer in the House of Representatives. Their plan would save the federal budget deficit $68 billion over 10 years and on average reduce insurance premiums compared to what they would be under current law.

protests“Under Republican health care reforms, premiums will go down, making coverage more affordable for families and employers, which is the first step to reducing the number of uninsured Americans,” said Republican Representative Dave Camp.

The proposal is far more limited in scope than the sweeping healthcare overhaul written by Democrats that the House is expected to debate on Saturday. The Republican proposal would provide for the sale of insurance coverage across state lines and calls for medical malpractice lawsuit reforms.

The proposal would also provide incentives to states to encourage them to review their insurance rules and mandates to find ways to reduce costs and expand medical coverage.

Now the bad news. The proposal would reduce the rolls of the uninsured by about 3 million in 2019, leaving about 52 million people without medical coverage, the CBO said. Also, the CBO said that premiums for some people, mostly the less healthy, would go up, feeding into Democratic criticisms that the Republican plan would allow insurers to “cherry pick” and enroll healthier, less costly people.

“The Republican approach is certainly not healthcare reform,” said House Democratic Leader Steny Hoyer. “It’s a large amount of talk, with very little walk.”

CBO stressed that its estimates were preliminary.

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Photo credit: Reuters/Joshua Roberts ( U.S. Capitol police watch protesters opposed to Democratic healthcare refrom


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How about a better idea?

A single-payer system, modeled after the German system, would cost about $900 billion per year.

In 2007, the combined Federal, State, and local government expenditure on health care was $1035.7 billion. So, we can fully nationalize health care with a single-payer system, provide health care to every American, and cut government health care spending by at least $100 billion per year at the same time.

Additionally, adopting a single-payer system will free up more than $1.2 trillion per year in private funds no longer needed to pay for – largely illusory – private health insurance.

Adopting a single payer system will also save the lives of nearly 12,000 infants per year – if our infant mortality rate drops to that of Germany from what is is now.

The bottom line is that we are already paying for universal health care, we just aren’t receiving it.

/Data from: the Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Dept. of Commerce, Bureau of Economic Analysis; the U.S. Bureau of the Census; the U.K. National Health Service; and the U.S. Central Intelligence Agency World Factbook.

Posted by AC | Report as abusive

Re: the comment on Germany, it’s laughable that you think you can guess the cost of an entire revamping of the whole healthcare system. We should be doing incremental changes and allowing states to be our testing labs. So far all the states that have had ‘universal’ healthcare plans have seen fraud and huge costs overrun. No one argues the merits of trying to make health care accessible, but it comes down to costs and some measures are not sustainable.

Posted by Jay | Report as abusive

Five months after John Boehner claimed the GOP was “putting the final touches” on their own healthcare plan, THIS is what they come up with? No wonder 17% approve, and 67% disapprove, of the way Republicans in Congress are handling health care.

I wonder if Rasmussen asks that question in any of his surveys? If you guessed no, you would be correct, he doesn’t. Gee, I wonder why?

Posted by getplaning | Report as abusive

What is it with the liberals and considering their proposal as a cost reduction. Their proposal is collecting taxes and fees over a ten year period and only supplying a benefit of any kind over 6 years. And even with the collect of funds during 4 years with no expenditure it is not reducing any of the deficit spending. This is a documented fact. This is the same government shell game the Congress plays with both Medicare and Social Security presently. The public needs a choice and should not include any choice which is control from the government. It would just be a continuation of the deficit riddled program they currently have just on a much larger scale. This would spell disaster.

Posted by James | Report as abusive

The only relevant point is that over 54 percent of the people do not want any health care plan mucking through congress.

Making this into a democrat/republican issue is not relevant, but some people just don’t get that important fact.

The majority of Americans do not want the government controlling their health care. That’s the only relevant point….

Posted by TC | Report as abusive

RE: Guessing the cost.

I’m not guessing: the cost per capita of the various universal health care systems is well documented. Take the per capita cost and multiply by national population. With the German system, it’s roughly USD3000 per person. The US has a population of about 300 million. To find the approximate cost of such a system in the US, multiply $3000 x 300 million – and you get $900 billion.

Posted by AC | Report as abusive

Today’s medical professional liability system is too adversarial and too expensive. There are alternatives. More at http://www.healthcaretownhall.com/?p=175 3

Posted by Jeremy Engdahl-Johnson | Report as abusive

I don’t think that it is a simple task to extrapolate the costs from one country’s system (Germany as suggested earlier) –and apply it to the US on a per capita basis. That would mean bringing down the violent crime rate, some doctor/nurse salary rates and reducing the cost of malpractice insurance. If it is easy, why not do these thins first – then I am sure that it would be easier to get support for a universal plan.

Posted by Murray Jacklin | Report as abusive

Wow, what a plan, a handout to their buddies in the helathcare industry, just like the presciption drug plan was a handout to big pharma. Less costly because it fixes nothing.

We spend more (on average) and get less (on average) than any other industrialized nation…but since these are averages, that means 50% are probably quite content, being the ‘above average’ part of the population. Now if we could (or would) vote in inverse numbers to our coverage, this would be a much different debate.

In the end, if health care costs rise 2%/yr faster than GDP as they have historically, we’re screwed no matter what solution is proposed, unless it has the ability to cap expenses. This plan ‘offers incentives’ for states to find ways to cut costs…don’t states already have the incentive to cut costs (saving money?)

Maybe the system costs are out of whack due to the disparity of pay…in the end, the service you get is granted by a nurse’s assistant making $10/hr, who really has no motivation to be competent.

Posted by Mike | Report as abusive

AC states: “A single-payer system, modeled after the German system…”

If the German health care system is as fabulous as you claim, why is Germany’s Health Minister developing “reform” legislation as we speak?

Germany’s current health-care system “faces an uncertain future due to exploding costs, a rapidly aging population and a burdensome bureaucracy.”

Read more at:
http://www.time.com/time/world/article/0  ,8599,1933169,00.html

Posted by sally | Report as abusive

AC, you need to revisit your sources. They all concur that the US spent over 2 trillion on healthcare in 2007, not the 1 trillion that you claim.

Posted by kaydahl | Report as abusive

Mike, Obama’s administration cut a deal with pharma that put a limit on the financial hit pharma would take in trade for pharma’s support of Obama’s plan. Pharma net profit margins average over 20%, the “evil” private insurance industry average is around 3%.

Posted by kaydahl | Report as abusive

Congressman Coffman (R – CO) proposed an amendment to the bill that would require members of congress and the President to be on the “public option”, which this bill force us all to, over time. Democrats unanimously voted down this amendment. So if members of congress don’t want to be on this terrible plan, why should we all be forced to it? What, you think we will still have choices? Then you have not read the legislation. Some insurance companies are “grandfathered” for a while, but after that, it is only legal to buy insurance that meets the government standard the bill defines.

Posted by TW | Report as abusive

Anything the republicans come up with is always bad news. They want to keep their insurance companies in business so they can get some campaign contributions. They also don’t want Obama to succeed so they can get back into the grave train.

Posted by Craig | Report as abusive