Pressed by Republicans on the House Ways and Means Committee about the true cost of health care reform, the White House Office of Management and Budget was only able to say that the final number is something the administration and Congress must work on together.

During the Ways and Means Committee's March 4 hearing on the administration's fiscal 2010 budget outline, ranking member Dave Camp, R-Mich., noted that the budget already proposes major changes in Medicare and Medicaid to create a $634 billion health reform reserve fund. "If $634 billion is a down payment, what is the full cost and why is that number not in this budget?"

Camp added, that since some experts have estimated the cost of President Barack Obama's health care plans at over $1 trillion, "I assume you've hidden in here somewhere another $400 [billion] in tax increases and Medicare cuts."

Orszag said: "The purpose was to put a significant down payment on the table, which we've done - $634 billion - to get the process started and avoid the mistake that has sometimes occurred in the past, in which we've come to the Congress with, 'Here's the health care plan, please pass it.' We want to work with you both on the benefit design side and on any additional funding that will be required."

The budget already proposes cuts that could cost the pharmaceutical industry a significant amount, namely an increase in the base Medicaid rebate on drugs from 15.1 percent to 22.1 percent (¹ Also see "More Coverage, More Rebates: Increased Medicaid Rx Rebate Would Help Support Proposed Health Reform Fund" - Pink Sheet, 26 February, 2009.).

A couple of potential cost-cutting mechanisms favored by Democrats are conspicuously absent in the budget: government negotiation of Medicare Part D drug prices and applying Medicaid rebates to Part D dual eligibles. However, if the $634 billion is only a down payment and Orszag sees the potential for the overall price tag to grow while working with the Democrat-controlled Congress, those items could be eyed as prime candidates as ways to counter the growing cost.

Orszag was adamant about the need to enact health care reform this year, repeating that desire several times throughout his testimony.

-Scott Steinke (s.steinke@elsevier.com)

Republicans Challenge Orszag On Total Health Reform Cost

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