CBO projects no immediate savings in Clinton's health care proposals

February 03, 1993|By New York Times News Service

WASHINGTON -- The Congressional Budget Office said yesterday that neither consumers nor the federal government would get any short-term savings from proposals to overhaul the nation's health care system put forward by President Clinton as well as by Republican and moderate Democratic lawmakers.

That conclusion, delivered by Robert D. Reischauer, director of the budget office, prompted expressions of frustration from members of Congress at a hearing of the House Ways and Means Subcommittee on Health.

It also touched off a political brawl as lawmakers reacted to Mr. Reischauer's testimony -- a sign that bodes ill for efforts to forge a bipartisan consensus on the complex issues involved in health legislation.

Normal partisan strains are intensified by the fact that the president's wife, Hillary Rodham Clinton, is in charge of drafting a health proposal for the administration.

Mr. Reischauer's position is important because he is the official scorekeeper on whom Congress relies to assess the cost of legislation.

Rep. Bill Thomas of California, the ranking Republican on the subcommittee, criticized Mr. Reischauer, saying his estimates implicitly favored "centrally planned and dictated budgets" of a type favored by many liberal Democrats.

By contrast, Rep. Pete Stark, D-Calif., the chairman of the subcommittee, welcomed Mr. Reischauer's testimony as supporting Mr. Stark's skepticism about managed competition. Mr. Stark said the testimony showed that "managed competition is to health care what the Laffer curve was to economics: a hope and a prayer and an untested theory."

The Laffer curve illustrated the theory, favored by Reagan administration officials, that a cut in certain tax rates would lead to an increase in government revenue by giving people new incentives to work, save and invest.

The Congressional Budget Office, repeatedly embarrassed by its underestimates of Medicaid costs, has been extremely cautious in computing the costs and benefits of proposals to revamp the nation's health care system. It is willing to recognize savings from a statutory limit on health spending, but only if there is a way to guarantee tough enforcement of the limit.

At yesterday's hearing on the rules for calculating the costs of health care legislation, Mr. Reischauer said he saw no short-term savings from a strategy of "managed competition," in which consumers band together and buy care from competing networks of doctors and hospitals.

In last year's presidential campaign Mr. Clinton said he favored managed competition within the framework of a national budget to limit all health spending, public and private. Since the election, Clinton aides have said they hope to use the savings to cover the cost of guaranteeing health-insurance for all.

But Mr. Reischauer testified yesterday that managed competition would not produce any "significant savings in national health expenditures" for at least five years. Whether it will save money after that is unclear, he said.

In September, a group of moderate and conservative Democrats led by Rep. Jim Cooper of Tennessee introduced a bill embodying the idea of managed competition. Assuming the government requires all health plans to provide a comprehensive set of benefits, Mr. Reischauer said, the bill would initially increase health spending. But he added that after a few years, health spending would be about the same as under current law.

The nation spent $838 billion on health last year, and the Congressional Budget Office estimates that, if current trends continue, outlays will double, to nearly $1.7 trillion, by the year 2000.

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