Savings won't pay for health plan, experts note

WASHINGTON — Despite President Barack Obama's insistence that his $900 billion health care plan won't increase already-huge federal budget deficits, experts say that it would — unless he raised more taxes than he's suggesting he would.

Obama told a joint session of Congress Wednesday night that "reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan."

However, he offered few details for how those savings might be achieved, and he didn't mention the key plan — backed by Democrats in the House of Representatives — to raise revenue by imposing higher income taxes on the wealthy.

The unanswered questions about his plan's costs and its effects on the federal budget deficit, on existing federal health care programs, on potential inflation and on taxes all remained hurdles in the path of congressional approval.

Few analysts are optimistic that Obama can trim enough spending from the government's current health care programs to pay for "most" of his health care overhaul, largely because Congress is likely to be reluctant to go along with such deep cuts.

Three House committees have approved similar health care overhaul bills, and the Senate Health, Education, Labor and Pensions Committee has passed its version. All contain a "public option," or a government-run health care plan that would compete with the private sector.

The House plan's major source of funding is a tax surcharge on adjusted gross incomes starting at $280,000 for singles and $350,000 for couples. It would generate an estimated $544 billion, or roughly half the cost of the bill, over the next 10 years. Obama didn't mention that.

A study released Wednesday by the Lewin Group, a health care consulting firm, found that while the House Democrats' approach would add only $39 billion to budget deficits over the next 10 years, it would add about $1 trillion between 2020 and 2029 as health care costs increase faster than income growth does. (Lewin is part of the United HealthCare's Ingenix health care consulting group; the study was commissioned by the Peter G. Peterson Foundation, a respected independent fiscal watchdog, and was based on estimates from the nonpartisan Congressional Budget Office.)

Over the next decade, the study found, the House Democrats' proposed Medicare and Medicaid changes would save about $231 billion, or about a quarter of the plan's cost. Between 2020 and 2029, that would rise to $735 billion in savings — still far from enough to cover what Obama calls "most" of the price.