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A Sobering Report From The CMS Actuary

April 23, 2010
11:36 am

Rick Foster, the chief actuary for the Centers for Medicare and Medicaid Services, has issued his findings regarding the health reform legislation passed by Congress last month.  The main headline will be that, contrary to the Congressional Budget Office report that this bill will reduce the federal deficit, Foster says the new reform law will result in $828 billion in new spending over the next decade but only $577 billion in savings.

But that’s not the part that caught my immediate attention.

Foster raises two points that should be of critical concern as Congress contemplates its next steps on health policy.

First, he projects that it will be difficult for the healthcare system to meet the increased demand for services and that this, according to today’s The Hill newspaper, “could lead to price increases, cost shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.”  The latter eventuality is particularly important with the new health reform law sending 15 million Americans into low-reimbursement Medicaid coverage.

Then Foster states that many employers may be motivated, under the new law, to stop providing health insurance coverage for their employees.  The Hill article states, “For example, some smaller employers would be inclined to terminate their existing coverage, and companies with low average salaries might find it to their – and their employees’ – advantage to end their plans.”  Should those employers cease providing coverage, employees would then either go into the expanded Medicaid program or find insurance through the new health exchanges.

I would find it hard to believe that it was the intent of many of the lawmakers who voted for this bill to undermine the current employer-based coverage system.  Yet, according to the CMS actuary, that could be the end result.

We know the next Congress will be looking at changes to the health reform legislation passed by this one.  Mr. Foster has provided at least a couple of issues that should be high on the agenda for review.

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