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CORRECTED - Q+A:U.S. deficit forecasts spotlight healthcare costs
August 25, 2009 / 8:30 PM / in 8 years

CORRECTED - Q+A:U.S. deficit forecasts spotlight healthcare costs

(corrects first paragraph to show figure refers to debt)

By Donna Smith

WASHINGTON, Aug 25 (Reuters) - Soaring healthcare costs have been blamed for the grim U.S. budget deficit, which two government reports on Tuesday said could push the national debt to $20 trillion in the next 10 years.

Congress is now grappling with President Barack Obama’s plan to overhaul the $1 trillion U.S. healthcare system, which Republicans say is too aggressive but which many Democrats say is indispensable.

Here are some questions and answers about what White House budget office and Congress’ nonpartisan analysts had to say about healthcare costs, and how it might effect debate in Congress when it returns from summer break on Sept. 8:

Q: What do reports say about healthcare spending?

A: The White House Office of Management and Budget (OMB) said long-term budget deficits are driven primarily by escalating healthcare costs. Costs of Medicare and Medicaid, the two main government healthcare programs that provide coverage to the elderly and poor, will continue to rise and crowd out spending for other programs if nothing changes.

“If health care costs continue to grow at their historical rates, Medicare and Medicaid will double as a share of spending on Federal programs within the next 30 years,” the OMB report said. Both the OMB and the Congressional Budget Office (CBO) agreed that the healthcare costs were growing at an unsustainable rate.

Q: What do the reports mean for the healthcare debate?

A: Both Democrats and Republicans will use the reports to highlight their arguments, which have dominated political discussion for the past several months.

Democrats will say the huge deficit increases outlined in the budget reviews underscore the urgent need to reform the system, while Republicans are likely to say it shows the country cannot afford the $1 trillion pricetag of trying to provide medical coverage for all Americans.

Q: How would Obama’s overhaul proposal rein in spending on federal healthcare programs?

A: The OMB report spells out some $622 billion in proposed savings for Medicare and Medicaid over the next 10 years that are likely to be part of the final reform legislation. The administration argues that things like improving productivity, promoting efficiency and accountability and reducing hospital readmission rates can save billions of dollars while improving the quality of care provided to patients.

Republicans, who in the past have supported trimming spending for Medicare, are taking aim at Obama’s proposed cuts arguing that program savings should not be used to finance healthcare reform but to shore up the government program.

Q: Are there other opinions?

A: Many Americans are confused and pessimistic. A new Thomson Reuters survey shows that Americans are skeptical that reform will improve the quality of healthcare or its affordability. A study of consumer attitudes about reform, based on a survey of 3,007 households conducted from July 28 to August 9, showed that only 37.9 percent of those surveyed believe the reform will improve the cost of care and even fewer, 30.3 percent, believe reform will improve quality.

Even reform advocates say it will take years for many of the new cost savings to have an impact on the budget and that Obama will have to do more than change healthcare to have any real effect on the deficit. And no one is actually talking about reducing healthcare costs, just keeping them from going up as much as they have in the past.

Q: What is Congress likely to do when it comes back

A: Lawmakers got an earful from both sides at some very heated town hall meetings on the issue. The debate is likely to make Congress a little more cautious as it proceeds with the reform effort. So far, only three Senate Republicans are working with Democrats to try to craft a bipartisan proposal.

When Congress returns in early September, Obama will have to decide if he wants to continue to try to win over some Republicans by trimming back his proposals or work for a bill that Democrats can pass by themselves with majorities in both houses of the legislature.

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