WASHINGTON — The Congressional Budget Office said Thursday that many of the health care proposals championed by President-elect Barack Obama and other Democrats would carry a high price tag and would generate only modest savings.
The budget office, an influential voice in the work of Congress, analyzed 115 options, including proposals to expand coverage and slow the growth of health spending.
Some of the options, including proposals to increase taxes on cigarettes and nondiet soft drinks, are sure to meet stiff political opposition.
One bright spot in a generally bleak picture was the estimate of potential savings from a requirement for doctors and hospitals to use health information technology, including electronic medical records, as a condition of participating in Medicare.
Such a requirement could save the federal government $7 billion in the first five years and a total of $34 billion over 10 years, by reducing medical errors and avoiding unnecessary tests and procedures, the budget office said. It “would also lower health insurance premiums in the private sector,” the report said.
Without action by Congress, the report said, health costs will continue to soar, the number of people without insurance will rise by nearly one million a year, to a total of 54 million in 2019, and spending on health care will increase to 25 percent of the gross domestic product in 2025, up from 16 percent in 2007.
In keeping with its duty to provide objective, impartial analysis, the budget office did not endorse any options, but it fleshed out many ideas circulating on Capitol Hill.
Democrats and many Republicans say they will make a serious effort to overhaul the health care system in 2009. Those changes are essential for economic recovery, they say.
But Mr. Obama and other Democrats have not been precise about the cost of their proposals, nor have they said in detail how they would pay for them. One of the Democrats’ favorite proposals, rolling back tax cuts for high-income people, is already scheduled to occur in 2011, so, under the bookkeeping rules used by Congress, it would not produce a windfall of new revenue.
Lawmakers from both parties said they would pay close attention to the cost of new federal subsidies for health coverage because these subsidies — unlike the one-time bailouts for banks and other financial institutions — would be recurring federal obligations for years to come.
Requiring employers to provide health insurance to their employees or pay a fee to the federal government would bring in $47 billion of new federal revenue in the next 10 years, the report said.
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A proposal to establish a national insurance pool for people who cannot obtain coverage on their own in the individual market would cost $16 billion in the next decade, it said.
Mr. Obama and many other Democrats want the government to negotiate with drug manufacturers to get lower prices for Medicare beneficiaries.
The Congressional Budget Office said such negotiations “would produce small if any savings” because the government would not have enough leverage to secure significant discounts beyond those already obtained by private insurance companies that manage the Medicare drug benefit.
But the budget office said Medicare could save $110 billion in the next 10 years if Congress simply imposed a form of price controls, requiring drug makers to provide the government with a 15 percent rebate, or discount, on brand-name drugs covered by the new Part D of Medicare.
Eliminating a notorious gap in Medicare coverage of prescription drugs, known as a doughnut hole, would cost more than $130 billion over 10 years, the report said.
Research to compare the effectiveness of different drugs and treatments might help doctors and patients make better decisions.
But it would not save the government much — $1.3 billion in the next decade — and it would reduce total spending on health care in those years by less than one-tenth of 1 percent, the budget office said.
The federal government could save $12 billion in the next decade if it established a procedure for approval of generic versions of expensive biotechnology drugs, the report said. It did not estimate the additional savings for consumers and employers, which could be substantial.
The report sets forth an elaborate proposal that would allow doctors and hospitals to share in the savings if they improve the quality and reduce the cost of care for people on Medicare.
Under the proposal, Medicare would pay bonuses to groups of doctors who met certain performance measures.
Video: How to fix health care In response to such financial incentives, the report said, doctors would become more efficient and would reduce “the volume and intensity of services provided to their patients,” saving $5 billion for Medicare in the next decade.
In one particularly sobering chapter, the report notes that, under existing law, Medicare will cut fees paid to doctors by 21 percent in 2010 and by about 5 percent in each of the next few years.
To avoid such cuts and freeze payment rates at their 2009 levels would cost the government $318 billion over the next decade, the report said.
This story, Budget Office Sees Hurdles in Financing Health Plans, originally appeared in The New York Times.
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