Feds Eye Big Savings from Health Reform

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One of the biggest issues in the debate over health care reform - and biggest concerns about the newly-passed bill - has to do with controlling costs. Last year, Americans spent nearly $2.5 trillion on health care, and that's expected to grow by $100 billion this year.

CBS News correspondent Sharyl Attkisson reports on what's in the health care plan to bring those costs down, as part of our User's Guide to Health Care Reform.

Special Report: Health Care Reform

The big question is how the government can insure an extra 32 million people and save money.

First, there's the so-called "Cadillac tax." Starting in 2018, insurance companies will be taxed 40 percent on their high-end insurance plans - ones with premiums adding up to more than $27,500 a year for a family. Democrats say that's to discourage "overuse" of health care.

There are also provisions to:

Attack waste, fraud and abuse;

Create health insurance exchanges, competitive marketplaces expected to keep premiums low (companies with excessive price increases can be excluded from the exchange); and

Promote value-based payments. That means systems that encourage hospitals and doctors to work together to manage care and share in the savings.

Five hospitals in the West are already doing that in a pilot program devised under the Bush administration.

Medicare pays them a "bundled" flat fee for certain medical procedures. The hospitals and doctors perform the procedures for less through methods like ordering products in bulk and streamlined billing.

"Costs have gone down for Medicare as the provider and the quality has gone up for the patients," said David Fox, a surgeon for Northeast Orthopedics.

With San Antonio Baptist's five pilot hospitals, Medicare has saved $1 million in nine months. Hospitals saved $2 million. And the patients can get a government rebate check from $300 to $1,100.

Results like that are the promise of health care reform. Yet many states are skeptical; 13 are suing the federal government on constitutional grounds. And they argue that Medicaid expansion will force them to create new bureaucracies and further strain their budgets.

According to Alabama Attorney General Troy King, the Obama administration picked a bad time to say, in King's words, "'We're going to make you spend more money on a deal that we've cooked up that doesn't even comply with the Constitution."

Texas alone predicts the president's health care reform plan will cost that state $24 billion over 10 years. The federal government may be planning big savings, but some states say it will come at a huge cost to their residents.

More Details of the Bill:
Summary of What's in the Bill
Uninsured? What the New Bill Means for You
Already Insured? Get Ready to Pay More
Feds Eye Big Savings from Health Reform
How Health Reform Affects Small Businesses
Provisions Which Take Effect in Short-Term
Read the Text (PDF): Complete Senate Bill | Reconciliation Measure

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    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.