Monday, May 17, 2010

Healthcare Reform Now Predicted To Be More Costly Than Originally Projected

Who didn't see this one coming? Now that we have healthcare reform passed and all of its provisions that were contained in the 2000 page document are being analyzed, it appears it will cost us a bit more than projected. The Congressional Budget Office (CBO) is now estimating that the new law may cost an additional $115 billion over the next 10 years. If Congress approves all of the additional spending called for in the legislation, it could push the 10 year cost of the overhaul above $1 trillion.

The additional expenses include $10-20 billion in administrative costs for agencies to carry out the law, $34 billion for community health centers and $39 billion for Indian care. These costs were not included in earlier estimates because they are not mandatory under the new law. They will need Congressional approval at a later time. My guess is that this approval will be difficult to obtain particularly after this November's elections.

Don't get me wrong, I believe that healthcare reform is not only a good thing but also necessary. Ignoring the uninsured and pretending that they currently do not cost the system anything is folly. I am glad to see coverage for these folks expanded. I am also pleased with the push for preventive and primary care coverage. But keep in mind that the real driver of healthcare reform is the fact that the current system can't continue to finance the cost increases we are seeing. We need to focus on how to make healthcare more cost effective. Some of the provisions in the new law address this while other obvious areas that do not fit the current political climate (ie: tort reform) are being ignored.

I don't see how the system will support an additional $115 billion over the next 10 years. Obviously not all of the provisions will be fully funded. But as cuts are made to make the new healthcare reform more affordable, let's not forget the real reason that we need it in the first place.

More on this later.
Mark Brodeur

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