March 15,2010

Grassley, Enzi Call for Complete Analysis from Administration’s Chief Actuary Prior to Votes on Health Care Reform Legislation

WASHINGTON – Sen. Chuck Grassley and Sen. Mike Enzi are asking the chiefactuary for the Centers for Medicare and Medicaid Services to provide a completeanalysis of health care reform legislation before the House and Senate vote on thelegislation.

Grassley and Enzi are the ranking members of the Finance and Health, Education,Labor and Pensions committees. They said the analysis they are seeking is critical because the chief actuary looks broadly at the legislation’s effect on national health carespending, access to health care and the economy. In contrast, the Congressional BudgetOffice focuses solely on federal health care spending.

Grassley and Enzi said legislation that affects such a significant segment of theeconomy and touches the lives and wallets of every American deserves the thoroughanalysis that the chief actuary would provide. A previous analysis from the chief actuaryshowed that the Senate health care reform bill would increase health care spending, limitaccess and reduce quality. Grassley and Enzi said members of Congress should knowwhether any of those issues were addressed before being asked to vote on health carereform again.

The text of the Grassley-Enzi letter to the chief actuary follows here. A summaryof the chief actuary’s analysis of the Senate health care bill follows that.

March 15, 2010

Mr. Richard S. Foster
Chief Actuary
Department of Health and Human Services
7500 Security Boulevard, Mail Stop N3-01-21
Baltimore, Maryland 21244-1850

Dear Mr. Foster:

We are writing to request that you provide an analysis of the complete budgetaryimplications and coverage effects of any health reform legislative package, prior to itsbeing voted on in either the House or Senate. According to recent reports, thislegislation will consist of two separate bills that together form the final health care reformpackage. We very much appreciated your assessment of the House and Senate healthreform bills at earlier stages in this important debate. Your analysis of this newlegislative package will greatly assist Members and inform the debate around how theseproposals will raise health care costs, affect Medicare beneficiaries’ access to care, andincrease the deficit.

Given the President’s commitment to transparency in the health care reform process, weexpect that you will be provided with the draft legislative language with sufficient time toreview the legislation prior to any floor consideration or vote. It would be unfortunate ifCongressional leaders force the legislative process forward before you are able to provideyour analysis, which would force Members to vote on this legislation without havinganswers to these key questions.

Health care reform is a monumental task that not only has serious implications for theAmerican economy; it will also personally touch the lives of every American. For manyMembers their votes on health care reform will be the most important votes they castwhile serving in Congress. Rarely do we vote on legislation that will touch the lives ofevery single American in such a personal way. Before Members are asked to cast suchan important vote, it is imperative that we have a thorough analysis of the entire packageand its implications.

In keeping with your previous analyses of the broader House and Senate bills, we wouldrequest that this new analysis examine the effect of the legislative package in its entiretyand should include the full cost of this legislative package for individuals, businesses, andgovernment programs. We would also ask that you report what impact this legislationwould have on the quality of care, and access to health care services. Finally, we wouldspecifically want to know if this legislation will reduce the future rate of growth innational health expenditures and what impact it will have on future federal budgetdeficits.

We look forward to reviewing your analysis of this new health reform bill, once theWhite House and Congressional Leaders begin to make the details public. It is absolutelycritical that the American people and their representatives have the best informationpossible regarding the impact of this legislation before the House or Senate vote on theseimportant measures.



Charles E. Grassley 


Michael B. Enzi

For Immediate Release
Friday, December 11, 2009

CMS Chief Actuary spells out impact of Reid bill on national health expenditures, Medicare coverage, financing

 WASHINGTON --- Senators Chuck Grassley (R-Iowa) and Mike Enzi (RWyoming)today said that in response to their request, the Chief Actuary for the Centersfor Medicare & Medicaid Services has reported on the overall financial effects, coverageeffects, and national health expenditures effect of the Patient Protection and AffordableCare Act of 2009, and the specific impacts on the Medicare Trust Fund exhaustion date,on Part B premiums, and on Part A and Part B coinsurance amounts.

“This analysis provides a lot of valuable information about the realities andrepercussions of the Senate health care bill. Most of all, it shows how Senator Reid’s billdoesn’t do anything to reduce the unsustainable growth in health care spending and, infact, would make health care costs grow even more rapidly,” Grassley said. “There’s nogood answer for Congress spending $2.5 trillion to make things worse.”

“The experts tell us the Reid bill would drive up costs and hurt seniors onMedicare,” Enzi said. “Higher costs and cuts to Medicare are not the reforms theAmerican people want and need. How many more devastating studies do we need beforethe Democratic leadership will agree we need to scrap these flawed bills and start over?”

The Ranking Members of the Finance and HELP Committees also pointed tothese findings of the Chief Actuary’s analysis, which was delivered late Thursday:

-- The Reid bill increases National Health Expenditures. The increase would be .7percent during 2010-2019. Despite promises that reform would reduce healthcare spending growth, the Reid bill actually bends the health care cost curveupwards. (page 19)

-- The new fees for drugs, devices and insurance plans in the Reid bill wouldincrease prices and health insurance premium costs for consumers. This wouldincrease national health expenditures by approximately $11 billion per year. (page 16)

-- The actuary’s analysis shows that claims that the Reid bill extends the solvency ofthe Medicare HI Trust Fund and reduces beneficiary premiums are conditioned onthe continued application of the productivity payment adjustments in the bill,which the actuary found were unlikely to be sustainable on a permanent annual basis. (2 page addendum memo on the Part A Trust Fund, Bart B Premiums andParts A and B Co-insurance Amounts)

-- The Reid bill creates a new long-term insurance program (CLASS Act) that theCMS actuaries found faces “a very serious risk” of becoming unsustainable as aresult of adverse selection by participants. (page 19) The CMS actuary found thatsuch programs face a significant risk of failure and expects that the program willresult in a “net Federal cost in the long term.” (page 13)

-- The Reid bill funds $930 billion in new federal spending by relying on Medicarepayment cuts which are unlikely to be sustainable on a permanent basis. (page18) As a result, providers could “find it difficult to remain profitable and, absent legislative intervention, might end their participation in the Medicare program.”(page 9)

-- The Reid bill is especially likely to result in providers being unwilling to treatMedicare and Medicaid patients, meaning that a significant portion of theincreased demand for Medicaid services would be difficult to meet. (page 18)

-- The CMS actuary noted that the Medicare cuts in the bill could jeopardizeMedicare beneficiaries’ access to care. He also found that roughly 20 percent ofall Part A providers (hospitals, nursing homes, etc.) would become unprofitable within the next 10 years as a result of these cuts. (page 9)

-- The CMS actuary found that further reductions in Medicare growth rates throughthe actions of the Independent Medicare Advisory Board, which advocates havepointed to as a central lynchpin in reducing health care spending, “may bedifficult to achieve in practice.” (page 18)

-- The Reid bill would cut payments to Medicare Advantage plans by approximately$110 billion over 10 years, resulting in “less generous benefit packages” anddecreasing enrollment in Medicare Advantage plans by about 33 percent. (page 10)