CBO: Over 10 years, finance health reform bill will cost $829 billion but reduce deficit

Oct 9 2009

The Congressional Budget Office yesterday released its updated cost estimates for the health bill being considered by the Senate Finance Committee.

The Los Angeles Times: "The nonpartisan Congressional Budget Office calculated that the legislation, written by Sen. Max Baucus (D-Mont.), would cost $829 billion by 2019. But because that tab would be offset by spending cuts elsewhere and by new revenue, the bill actually would lower the deficit by $81 billion over the next decade -- and potentially even more in later years -- the budget office concluded. At the same time, the bill would expand the percentage of Americans with health insurance from 83% to 94%, according to the estimate."

"The preliminary CBO report sets the stage for the finance panel to vote on Baucus' healthcare blueprint later this week or next -- a key step in the Democratic campaign to send President Obama a healthcare overhaul bill by the end of the year." Senate Majority Leader Harry Reid will then merge the bill with one from the Senate Health Committee and send it to the Senate floor for debate (Levey, 10/8).

The Washington Post: "White House budget director Peter Orszag applauded the analysis, saying the bill 'demonstrates that we can expand coverage and improve quality while being fiscally responsible,' and (Reid) (D-Nev.) called the CBO report 'another important step down the road toward enacting comprehensive health insurance reform.' But senior Republicans seemed only to harden in their opposition to the measure." The bill would cover an additional 29 million Americans — not illegal immigrants — by 2019 by extending Medicaid to more people and subsidizing private insurance for low- and middle-income Americans (Montgomery and Murray, 10/8).

The Associated Press: "While generally positive about the legislation's effects, the report contained important caveats. One noted that the estimate does not include the costs of proposed payment increases for doctors serving Medicare patients, roughly $200 billion through 2019. Additionally, a so-called fail-safe mechanism to hold spending in line could result in cuts as large as 15 percent in federal subsidies designed to help the poor afford insurance, CBO said" (Espo, 10/8).

The New York Times: "The projected 10-year cost of the bill did increase, from $774 billion in Mr. Baucus's original proposal. But the new costs were more than offset, and the budget office found that the latest version would reduce deficits by $32 billion more than the original plan. … The budget office found that the Finance Committee would reduce payments to private Medicare Advantage plans by $117 billion over 10 years while cutting the growth of Medicare payments to other health providers by $162 billion" (Pear and Herszenhorn, 10/7).

Kaiser Health News: "Roughly 23 million people would purchase health insurance through the health insurance exchanges and there would be roughly 14 million more enrollees in Medicaid and CHIP" (Carey, 10/8).

The Wall Street Journal's Health Blog: "The CBO estimates that only $3 billion of an allotted $6 billion will be spent for the non-profit insurance co-ops described in the bill. ... CBO says 'they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments'" (Goldstein, 10/7).

Roll Call: "However, Republicans and other critics are likely to highlight one portion of the CBO's letter, which states that the cost estimate of Baucus' bill is preliminary pending an analysis of the final legislative language" (Drucker, 10/7).

The Associated Press/New York Times has a primer on all the major health reform proposals, including an outline by House Republicans. Versions of the primer have been previously published by the AP, but Wednesday night's edition reflects the latest estimates on Senate Finance Committee's overhaul legislation(10/7).