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Education & Labor Committee Republicans

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Labor Committee Republicans Call for Hearing with CMS Actuary on Health Care Costs
New Analysis from Obama Administration’s Health and Human Services Department Estimates 14 Million Americans Will Lose Current Employer-Provided Health Care, Job Creators Will Face $87 Billion in Penalties

Republican members of the U.S. House Education and Labor Committee today called for a public hearing seeking the testimony of Richard S. Foster, chief actuary for the Centers for Medicare and Medicaid Services. In a letter to the committee’s chairman, the Republican members pointed to a recent analysis from Mr. Foster that found total health care spending will increase by $311 billion as a result of the recently enacted health care overhaul. 

“Mr. Foster’s memorandum contains several troubling conclusions regarding the impact of the [Patient Protection and Affordable Care Act], including a number of adverse implications for employer-sponsored group health plans. The issues raised by Mr. Foster’s memorandum are worthy of prompt consideration by this committee,” the members wrote. 

Among the findings of the CMS Actuary’s analysis: 

  • “…we estimate that overall national health expenditures under the health reform act would increase by a total of $311 billion (0.9 percent) during calendar years 2010-2019.” (page 4)  

  • “We estimate that such actions would collectively reduce the number of people with employer-sponsored health coverage by about 14 million…” (page 7)  

  • “…a number of workers who currently have employer coverage would likely become enrolled in the expanded Medicaid program or receive subsidized coverage through the Exchanges. For example, some smaller employers would be inclined to terminate their existing coverage…” (page 7) 

  • “Additionally, for firms that do not offer health insurance and are subject to the ‘play or pay’ penalties, we estimate that the penalties would total $87 billion in 2014-2019.” (pages 5 – 6) 

  • “In general, voluntary, unsubsidized, and non-underwritten insurance programs such as CLASS face a significant risk of failure as a result of adverse selection by participants. … This effect has been termed the 'classic assessment spiral' or 'insurance death spiral.' … there is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.” (page 15) 

  • “…providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).” (page 10)  

  • “It is important to note that the estimated savings shown in this memorandum for one category of Medicare provisions may be unrealistic…Although this policy could be monitored over time to avoid such an outcome, changes would likely result in smaller actual savings than shown here for these provisions.” (pages 9 and 10)  

  • “Because of these transition effects and the fact that most of the coverage provisions would be in effect for only 6 of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the new legislation.” (page 2)  

“Although it is unfortunate that the findings of the CMS Actuary were not available prior to the final vote on the PPACA, the information remains no less important today,” the members concluded. “Accordingly, we respectfully request that you invite Mr. Foster to testify before the Committee to provide Members with the opportunity to fully understand the implications of his analysis.” 

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