Friday, July 17

Health-care proposals could worsen escalating medical spending

Congress's chief budget scorekeeper cast a new cloud over Democratic efforts to overhaul the nation's health-care system, telling lawmakers Thursday that the main proposals being considered would fail to contain costs -- one of the primary goals -- and could actually worsen the problem of rapidly escalating medical spending.

[I]t was clear that Mr. Elmendorf's remarks struck a nerve with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, who jointly appointed the economist to his post after the previous CBO director, Peter Orszag, was made White House budget director.

Ms. Pelosi, a California Democrat, complained that the CBO, in calculating the impact of health legislation, doesn't give "any credit" to certain proposals designed to reduce spending, such as preventive-care measures that backers of the bill say will reduce costs throughout the system.

In his appearance, Mr. Elmendorf suggested lawmakers could take steps to control costs. Among other things, he said Congress could reduce the tax subsidy that critics say encourages employers to offer large health-insurance policies. That idea was being considered by members of the Senate Finance Committee, but dropped after Senate Democratic leaders -- including Mr. Reid -- voiced concern. The proposal has been sharply opposed by labor unions, among other groups, that have big tax-advantaged plans.
By the way, according to The New England Journal of Medicine:
Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not.

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