WASHINGTON _ The results are now in for the leading market-based health care reform plan. The Congressional Budget Office(CBO) has completed its study of the managed competition health careplan sponsored by Rep. Jim Cooper (D-Tenn.) and Sen. John Breaux(D-La.). The report concludes that the plan will leave 25 million peopleuninsured by the year 2000 and, if it offers a comprehensive packageof benefits, it will increase the federal deficit by $19 billion in the firstfive years. However, after nine years it could reduce the federal deficitby $86 billion because savings would begin to kick in during the lastfour years.The fate of market-driven health care reform proposals may rest in thehands of the CBO because that agency must rule that new legislation isdeficit-neutral. Industry has argued that market forces will work betterthan government intervention to curb the spiraling costs of health carein the U.S.CBO Director Robert Reischauer, told the Senate Finance Committeeon Wednesday that estimating the potential savings of increasedcompetition in the health care marketplace is a treacherous business."Managed competition is an approach that is largely untried at thispoint," said Reischauer. "Markets will evolve and behavior will changegradually over time under a system such as this [the Cooper-Breauxplan]. That makes it particularly difficult to predict the future."The managed competition approach relies upon restructuring theinsurance market and rewriting tax laws to align market incentives forincreased competition. Its advocates claim that such a restructuring willdecrease health costs. The Clinton administration's plan and others relyon insurance premium caps, cost containment measures and globalbudgets to keep costs under control. Proponents of this approach arguethat the market has failed to produce a competitive, cost-effectivehealth care system.Reischauer said that there is "no empirical or analytical basis" for firmestimates of savings from market-based plans. He added that while costsavings from increased competition are possible, they are "a matter ofspeculation."With a limited budget and staff, Reischauer's agency has been giventhe unenviable task of analyzing all health care reform plans producedby the President and Congress. Legislators prefer to have completefinancial analyses of proposed legislation before they discuss changesand vote.But Reischauer said on Wednesday that the CBO is having seriousproblems meeting the demands of legislators. Although he hadestimated that analysis of the Cooper-Breaux plan would take three tofour weeks, in reality it took 12. Now he won't give estimates.Numerous bills are already backlogged at the CBO and several moreare currently being drafted."Health care reform is unlike anything the Congress of this nation hasundertaken in its complexity," said Reischauer. "In addition toproviding comprehensive reports on specific bills we are attempting toprovide guidance to committee chairmen drafting new bills. The paceis going to have to slow down." n
-- Lisa Piercey Washington Editor
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