Rising costs predicted in health care bill

Report finds Senate plan to cut Medicare a threat to seniors

Dealing an unexpected blow to Senate Democrat's health care bill, administration economists on Friday predicted the overhaul would accelerate rising costs of health insurance and medical services, and that its proposed Medicare cuts could reduce care for senior citizens.

A report by analysts at the Health and Human Services Department said the bill would increase the nation's annual spending on health care beyond the current $2.5 trillion at a slightly faster rate than if Congress did nothing. It concluded that new taxes on drugs, medical devices and health insurance plans would trigger higher insurance premiums for consumers.

The report also said the Democrats' plan to pay for about half of the $1 trillion bill with Medicare cuts "may be unrealistic" and could undermine the Medicare program, warning the bill could force out of business one in five hospitals, nursing homes and home care providers.

The report, which included a disclaimer that it did not represent the Obama administration's position on the health care bill, supplied fresh ammunition to Republicans.

"Higher costs and cuts to Medicare are not the reforms the American people want and need," said Sen. Michael B. Enzi of Wyoming, ranking Republican on the Health, Education, Labor and Pensions Committee. "How many more devastating studies do we need before the Democratic leadership will agree we need to scrap these flawed bills and start over?"

White House spokesman Linda Douglass stressed the report's finding that the legislation would have a "a significant downward impact on future health care cost growth rates." She said opponents of President Obama's health care reform efforts were cherry-picking the report and ignoring the long-term benefits it cited.

"As savings from reform kick in, national health expenditures are projected to increase at a slower annual rate under the Senate bill than under the status quo," she said.

The report was prepared by the chief actuary at the Centers for Medicare and Medicaid Services, which specializes in long-range cost evaluations for Medicare. It analyzed the total public and private cost of the health care bill over the next 10 years, in contrast to earlier studies by the Congressional Budget Office that said the measure would minimally lower the record-setting federal deficit over the decade.

Under the Democrats' plan, according to the analysis, health care spending would rise by an additional 0.7 percent between 2010 and 2019, mostly the result of more people getting medical services.

Although the increased access to health care would drive up costs, the report found that the bill would accomplish Mr. Obama's goal of expanding health care coverage. About 93 percent of Americans would have health insurance under the plan, removing about 33 million people from the ranks of the uninsured.

Perhaps the most startling revelation in the report, however, was an assessment that cuts to the Medicare program could undermine it.

"Providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable," the report said. "Absent legislative intervention, [physicians] might end their participation in the program, possibly jeopardizing access to care for beneficiaries."

Senate Minority Leader Mitch McConnell, Kentucky Republican, said the bill got a "failing grade." He said the report, coupled with a CNN poll on Friday that showed 61 percent of Americans oppose the health care bill, was a seminal moment in the debate.

"How much more do we need to hear before we stop this bill and start over?" Mr. McConnell said.

Democrats are embracing the budget office findings that said the bill would reduce the deficit and likely not increase premiums for most people who already have health insurance.