Obama health plan to cost $75 billion -analysis

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President-elect Barack Obama’s plans to overhaul the U.S. health care system would cost the federal government $75 billion but would provide health insurance for 95 percent of Americans, consulting firm PriceWaterhouseCoopers said on Wednesday.

This works out to about $2,500 per newly insured person, the firm said in a report.

“The plan would increase to $1 trillion cumulatively by 2018 or approximately $130 billion per year,” the report said.

While the plan would extend health insurance to two-thirds of the 47 million people who currently lack it, the overhaul may worsen some problems, such as a shortage of primary care doctors, the analysis found.

“Unless costs are cut, growing health care costs will increase the costs of Obama’s plan dramatically over time and reduce the effectiveness of mandates. This could make the federal costs unsustainably high,” the report read.

“Because of the deficit and financial crisis, there’s unlikely to be any new federal money available, so health reform may require reallocation of dollars already in the health system.”

But some of the money could be recovered from payouts made to hospitals that care for the uninsured, the analysis found. It found that $25 billion, or about a third of the cost of Obama’s plan, could come from existing payments to hospitals for uncompensated care.

“Obama’s proposal is likely to increase revenues but lower margins for providers, pharmaceutical companies and health plans that increasingly depend on government payment,” the report read.

Some people have suggested that dealing with the global financial crisis outweighed the need for immediate health care reform, but PriceWaterhouseCoopers said they were not mutually exclusive. For instance, health reforms could spark new mergers and acquisitions, it said.

“The financial crisis and culminating market forces could accelerate health reform, not be a roadblock,” the report read.

WASHINGTON (Reuters)

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