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Cost Arguments Loom as Senate Launches Health Care Debate

By Richard Rubin, CQ Staff

November 25, 2009 – As the Senate prepares for its first week of formal debate on health care overhaul legislation, the Obama administration is working to head off arguments that the package would lead to excessive government spending at a time of record federal deficits.

Republican critics contend that both the House and Senate health care bills (HR 3962, HR 3590) would expand health insurance coverage without doing enough to control costs—either during the next decade or over the long haul.

But the White House is fighting back, challenging its opponents to show how they would do more to contain costs. Peter R. Orszag, director of the Office of Management and Budget, says both versions of the legislation contain numerous provisions designed to slow the growth of health care spending compared with what would happen if Congress leaves current laws unchanged.

The Senate bill, he noted, includes a provision to create an independent Medicare commission to recommend cost savings, an emphasis on evidence-based medicine, pilot programs for changing how health care providers are paid and an excise tax on high-cost health insurance plans.

On a conference call with reporters the day before Thanksgiving, Orszag attacked what he called "loosey-goosey" critics of the bills, arguing that people who have read and studied the legislation have found that it contains many of the cost-containment measures that experts have been discussing for years.

"I guess I would say to folks in the looser range: What specifically else would you do? Not, 'Oh, I'm unhappy, I'm grumpy, whatever.' Specifically, what would you do?" he said.

The main additional cost control item that Republicans seek would impose tight limits on medical malpractice lawsuits and caps on non-economic damages. A version of that proposal was included in the House Republicans' alternative proposal and it has been scored by the Congressional Budget Office as raising $54 billion over 10 years.

Orszag sidestepped a question about the omission of the excise tax from the House bill (HR 3962), which instead would raise much of its funding through an income surtax on wealthy households. He noted that President Obama has endorsed the idea of taxing high-cost health plans and said the excise tax is one of the four main cost-containment measures endorsed by many leading economists.

"We are in favor of a fiscally responsible health reform bill that includes these four pillars," he said.

But he would not discuss any communication between the White House and House leaders on the issue. More than 180 House Democrats have signed a letter opposing the tax, which they say would hit middle-income families. Unions, which have given up bigger wage increases in labor contracts to win generous health insurance coverage for their members, are strongly opposed to the excise tax.

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