A new study examining a major comprehensive health care reform proposal looks at the cost to employers and any burdens that might be placed directly on Americans with employer-sponsored health plans. The Lewin Group's analysis of America's Affordable Health Choices Act of 2009, as amended by the Energy and Commerce Committee, is the first critical analysis of health care reform costs that would extend beyond 2019.
The study shows President Obama's promise that reform legislation will pay for itself during the next 10 years is achievable. As for his pledge that it will not add to the federal deficit, the figures are not in his favor.
During the first 10 years, from 2010 to 2019, under the bill's implementation, the cost (net federal cost) is estimated at $39 billion and would be "nearly fully funded." But beyond that, in its second decade, the proposal would add an estimated $1 trillion to the federal deficit. This is due to rapid growth in health care costs that will outpace the growth in incomes and revenues over the longer term, according to the study.
"From the perspective of the federal budget, the study shows the Act would nearly achieve President Obama's goal of paying for itself over the next 10 years. In the second 10 years, however, the proposal would add an estimated $1 trillion to the federal deficit," the firm said in a press release.
By 2011, assuming full implementation and mature enrollment of the Act, almost 30 million people would gain insurance coverage in 2011, a reduction of 60 percent in the ranks of the uninsured. Forty-one million people would obtain health insurance through newly-created health insurance exchanges, including 21 million in the public plan. Enrollment in the Medicaid program would grow by 10 million.
Families in which all members currently have insurance would save an average of about $176 under the Act, while families with one or more uninsured members would, on average, see an increase in family health spending of $1,410 per family.
The cost to employers? Overall, employer health spending would increase by an average of $305 per worker. Employers that currently offer insurance would see an increase in health spending of $123 per worker, while employers that do not now offer coverage would see an increase in health spending by an average of about $813 per worker.
Most economists, according to the study, believe employers would eventually offset the increases in costs through slower wage growth. So even though families with health insurance are saving money under the Act, analysis indicates they would ultimately bear the burden of higher health costs.
Furthermore, small businesses currently providing insurance would save up to an average of $811 per worker due to a tax credit. The number of people covered in employer-sponsored plans (outside of the health insurance exchanges) would fall by 11 million, and overall enrollment in private plans would decline by about 900,000.
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