House Committee on Education and Labor
U.S. House of Representatives

Rep. Howard P. “Buck” McKeon
Ranking Member

Fiscally responsible reforms for students, workers and retirees.


Left Turns

April 23, 2010

CONTACT: Alexa Marrero
or Brian Newell
(202) 225-4527

Obama Administration Report Confirms: ObamaCare Will Lead to Higher Costs and Less Care

In support of a government takeover of health care, Speaker Pelosi stated, “The best action we can take on behalf of America’s family budgets and on behalf of the federal budget, is to pass health care reform.” 

As early as December, the Centers for Medicare and Medicaid Services (CMS) warned that government-run health care would cause health care spending over the next ten years to INCREASE by $222 billion – increasing the strain on families’ budgets and the federal budget. Despite the warning, Democrats forged ahead with their trillion-dollar plan. 

Yesterday, Richard S. Foster, the chief actuary at CMS, renewed his warning, only this time, the fiscal future for America’s families looks far worse. Here are just a few disturbing highlights: 

“…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) 

“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) 

“However, 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, and companies with low average salaries might find it to their – and their employees’ advantage to end their plans.” (page 7)  

“Thus, 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) 

“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)


This is the second report this week that highlights the natural consequences of the Democrats’ health care reform law, and as Democrats scramble to fix another broken promise of health care reform – rising health care premiums – it’s no wonder so many Americans are now confused as they grapple with constant reminders that Democrat promises are not matching reality.