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Study Finds Hill Health Plans Would Improve Coverage, Lower Cost

By Mary Agnes Carey, CQ HealthBeat Associate Editor

March 19, 2007 -- Many of the health care proposals pending on Capitol Hill could significantly reduce the number of uninsured Americans and decrease health care costs, according to a Commonwealth Fund study released Monday.

The report analyzed 10 health plans introduced in the 109th and 110th Congresses as well as President Bush's proposal to give tax deductions of $7,500 to individuals and $15,000 to families for purchasing health insurance, no matter what the cost or type of insurance or whether it is purchased through an employer.

Legislation sponsored by Sen. Ron Wyden, D-Ore., (S 334) and a bill from Rep. Pete Stark, D-Calif., that was introduced in the 109th Congress and is expected to be reintroduced later this year, would cover nearly all of the uninsured, while Bush's proposal could cover one in five Americans, the study concluded.

Instead of companies helping to buy insurance for their workers, Wyden proposes that private insurers offer coverage directly to consumers. Employers would transfer money they now spend on employee health insurance to workers' wages, and workers would purchase insurance themselves.

The Commonwealth Fund Commission on a High Performance Health System analysis said the Wyden proposal would increase federal spending by $24.3 billion in 2007, because of the offsetting tax revenue effects of requiring employers to "cash out" their health benefits as wages to employees. The bill would also reduce overall health spending by $4.5 billion, partly through insurance administration savings, the analysis concludes.

Stark's plan, which would open the Medicare program to everyone, would cost the federal government $154.5 billion in 2007 but reduce overall spending by $60.7 billion due to savings in insurance administration and prescription drugs. The Commonwealth Fund's analysis found that the president's plan would cost the federal government $70.4 billion in 2007 and reduce health system spending by $11.7 billion because people would reduce their use of health services. Insurance administration costs would also increase under the president's plan, the study concluded.

In addition to reviewing legislation, the report also looks at other ideas, such as expanding existing public health insurance programs like Medicare and the State Children's Health Insurance Program (SCHIP) as well as strengthening employer-based health insurance, to help reduce the number of uninsured.

Wyden's office had no immediate comment on the Commonwealth Fund study. A senior Bush administration official said the analysis did not consider both elements of the president's plan—a tax deduction and working with states to provide affordable health care options to consumers—so its full impact on the health system was not completely reflected.

In a statement, Stark said the analysis "confirms AmeriCare is a practical and affordable proposal to provide universal health coverage," said Stark.

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