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CBO says costs will rise as healthcare expanded

WASHINGTON, July 16 (Reuters) - Congressional Budget Office director Douglas Elmendorf told lawmakers on Thursday legislation to expand health care coverage would increase federal healthcare costs “to a significant degree” and revenue will need to be found to keep from increasing the deficit.

Asked by the tax-writing House Ways and Means Committee about his remarks to a Senate committee earlier Thursday that the legislation would not hold down healthcare costs, he said, “The point I made earlier this morning is that it raises future federal outlays more than it reduces future federal outlays.”

Elmendorf told the panel, “The coverage proposals in this legislation would expand federal spending on health care to a significant degree and in our analysis so far we don’t see other provisions in this legislation reducing federal health spending by a corresponding degree.”

He said ways to pay for the healthcare programs could include further savings from the Medicare health program or changes to the current exclusion from taxes of employer-paid insurance premiums.

The nonpartisan budget analysis arm of Congress has not yet estimated the cost of the full House healthcare legislation working its way through three House committees.

The House bill pays for the roughly $1 trillion 10-year cost of the healthcare overhaul with a combination of estimated savings in health costs and taxes worth $587 billion over the period. It sets up a government-run health plan to cover many of the uninsured and expands coverage in other government health programs.

The Senate Finance Committee is considering other options, including a tax on health insurers and a tax on employer-paid premiums. Chairman Max Baucus, a Democrat, said their task was not helped by President Barack Obama’s opposition to counting the value of employer-paid premiums as income.

Republicans seized on the CBO director’s comments as evidence the legislation should be rejected or at least more time should be taken to examine it. Obama has urged Congress to pass it out of each chamber by August.

“Today’s CBO testimony should be a wake-up call,” Senate Republican Leader Mitch McConnell said. “Instead of rushing through one expensive proposal after another, we should take the time we need to get things right -- especially at a time when hundreds of thousands of Americans are losing jobs every month.”

Backers of the House bill disputed this assertion. “It is true that we don’t know how much reform will bend the cost curve (slow the increase in healthcare spending); but we know it is better than doing nothing,” Jonathan Gruber, a Massachusetts Institute of Technology economist who backs the House bill said on a call organized by backers of the bill.

House Speaker Nancy Pelosi told reporters that she hoped the formula for paying for healthcare reform could change. Instead of half of the more than $1 trillion in costs being covered by savings program spending and the other half from new revenues, Pelosi said, “I hope that we can change that percentage” and “squeeze more savings.” (Editing by Bill Trott)