U.S. agency sees more health spending with reform

Wellness Center Medical Director Liz Sequeira confers with a patient at the clinic in Silver Spring, Maryland December 3, 2009.

WASHINGTON (Reuters) - U.S. healthcare spending would rise by about $234 billion over the next decade under the Senate Democrats' overhaul bill and some of the proposed savings might never be achieved, a U.S. agency said in a report released Friday.

It was the latest in a series of reports issued by the agency that oversees Medicare that cast doubt on some of the savings claims made by Democrats about one of President Barack Obama's top domestic priorities.

Republican opponents Friday seized on the report to underscore their message the sweeping healthcare reform will raise costs and hurt Medicare benefits.

"This report confirms what we've long known -- the Democrat plan will increase costs, raise premiums, and slash Medicare," said Republican Leader Mitch McConnell. "That's not reform. This analysis speaks for itself. This bill is a sham."

But Democrats said many of the potential cost savings in the bill were hard to estimate and that the bill would extend the financial life of the Medicare health program for the elderly and result in lower premiums and out-of-pocket expenses.

"The report shows that health reform will ensure both the federal government and the American people spend less on health care than if this bill doesn't pass, helping get a hold of America's debt and keep more money in people's pockets," said Senate Finance Committee Chairman Max Baucus, who helped write the legislation.

The report, written by Richard Foster, the chief actuary at the Centers for Medicare and Medicaid Services, said the increase in healthcare spending reflected the impact of millions of newly covered people seeking medical care.

"Although several provisions would help to reduce healthcare cost growth, their impact would be more than offset through 2019 by the higher health expenditures resulting from the coverage expansions," the report said.

Foster acknowledged his analysis of the sweeping reform had a "greater degree of uncertainty than is usually the case with more routine health care proposals."

SOME COST-SAVING PROPOSALS 'MAY BE UNREALISTIC'

The healthcare revamp seeks to rein in soaring costs and provide medical coverage to millions of uninsured people. The report said about 57 million people would be without health insurance in 2019 under current laws. The number would be reduced by 24 million if the Senate bill is enacted, it said.

The report, similar to one issued by the agency on the healthcare bill passed by the House of Representatives in November, went on to say the added demand for health services at first may be difficult to meet and could lead to price increases and a reluctance by providers to treat patients with low-reimbursement health coverage.

Medicare has significantly lower reimbursement rates than private insurers. Doctors, clinics and hospitals that rely heavily on Medicare patients for business "could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program," the report said.

Congress would probably find that politically unacceptable and the report concluded some of the Medicare cost saving proposals "may be unrealistic."

Democrats argued the $2.5 trillion U.S. healthcare system is fraught with wasteful spending and the savings from wellness programs and payment system reforms that would reward quality rather than quantity of treatments and services would be greater than estimated.

"There is a very significant cost savings target that can be achieved," Democratic Senator Sheldon Whitehouse said in a telephone conference with reporters.

"You could get a number down if you just went in and cut benefits," he said. "The problem (in the system) is not that benefits are too high, the problem is that it is managed poorly, it has enormous waste and duplication and error and resolving those things are just plain harder to cost by its nature."

(Reporting by Donna Smith; Editing by Peter Cooney)