Transcript: Simpson-Bowles on controlling health care costs

Transcript of excerpts from the Politico Playbook Breakfast with Alan Simpson and Erskine Bowles, co-chairs of the National Commission on Fiscal Responsibility and Reform, on sequestration and deficit reduction. The event was held on Feb. 19, 2013 and moderated by Mike Allen, Politico’s White House correspondent.

Mike Allen:
Mr. Bowles, on the front page of the Financial Times today, there’s a headline that says “Employers size up fines to avoid insuring staff under Obamacare.” It talks of large employers that say they are calculating what makes more sense – to pay the fine than to pay what it would cost to ensure their employees. That’s going to shift a huge cost burden to the exchanges. Are you worried about that?

Erskine Bowles:
Yeah. Look, I’m worried about the cost of health care period. As we traveled around the country and we talked to various business people, they are worried about the increased cost and they are shifting some people to less than 35 hours; they’re taking lots of steps so that they don’t have to cover people they have been covering, particularly people in the retail business.

Mike Allen:
Do you think there’s going to be a lot of that?

Erskine Bowles:
You know, I just have anecdotal information so I can’t give you any kind of real economic data but I can tell you that I actually – a good bit of it as we traveled around the country.

Mike Allen:
Of people saying that they’re going to try to avoid Obamacare either by cutting back hours or by paying the fine?

Erskine Bowles:
Right.

Mike Allen:
What are the consequences of that for the federal budget?

Erskine Bowles:
Well, the consequences of that is that people will be shifted to the exchanges and that’ll be an increased cost. And that’s why we want to bring down the cost of health care and that’s why we’ve made the recommendations for the $600 billion worth of cuts that we have in the health care program in order to slow the rate of growth in health care on a per capita basis to the rate of growth of the economy.

Alan Simpson:
Remember that gal from Texas we met? She was a small businessperson. She said, “Well, how much will the fine be?” And they told her, and she said, “Oh, the hell with that. I don’t care about that. I’ll pay that and move on.”

Mike Allen:
Sen. Simpson, do you think a lot of people are going to feel like she does?

Alan Simpson:
Anybody who’s employing anybody or trying to make a nickel and trying to do a job and all this stuff that everybody is really talking about and should knows that you have to do something with this health care system. And it’s just going to continue in what we’ve determined as automatic pilot. We said, “Well, let’s lop $400 billion out of it over 10 years and not let it go over 1% of GDP a year.” We can’t even get that done. At least you ought to put something in there with triggers and restraints or something, not letting this thing go up over 1% of GDP a year, which just drives us into the hole.

Erskine Bowles:
Mike, there are two sides of that coin though. You know, anybody in this room who doesn’t think those 35 or 40 million people who don’t have health care insurance today don’t get health care – you’re wrong. They’re getting health care; they’re just getting it today at the emergency room at 5 to 8 times the cost it’d be in the doctor’s, and that cost doesn’t disappear – it gets cost-shifted and it gets cost-shifted to you in the form of higher taxes and higher insurance costs.

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