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Life Health > Health Insurance > Health Insurance

Baucus Bill May Cut Costs

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The health bill proposed Wednesday by Senate Finance Committee Chairman Max Baucus might reduce the federal budget deficit by $49 billion over a 10-year period.

Analysts at the Congressional Budget Office and the congressional Joint Committee on Taxation give that estimate in preliminary analysis of a rough outline Baucus provided before he unveiled the actual bill draft.

The Baucus bill would rein in Medicare spending, impose new taxes on high-cost health plans and limit the tax break for flexible spending account contributions.

The program also would require insurers to sell health coverage on a guaranteed-issue basis, encourage individuals to buy health coverage through health exchanges, create a requirement that most individuals own health coverage, offer small employers group health tax credits, and require many employers to either provide health coverage or reimburse the government for part of the cost of helping employees buy individual coverage.

CBO and JCT analysts have based their estimates of the proposal’s impact on a preliminary description of the program, rather than on the text of the proposed bill, CBO Director Douglas Elmendorf in a letter summarizing the conclusions of the CBO and JCT analysts.

The $49 billion cost savings estimate “includes a projected net cost of $500 billion over 10 years for the proposed expansions in insurance coverage,” Elmendorf writes.

The proposal would create a total of $774 billion in health coverage credits and subsidies, generate about $215 billion in health insurance excise tax revenue, and generate $59 billion in revenue from other sources, Elmendorf writes.

The proposal also would cut $409 billion in anticipated spending, and other tax provisions in the proposal could increase federal revenue by $139 billion, Elmendorf writes.

If all of the proposed provisions stayed on the books, they probably would continue to cut the federal budget deficit after 2019, Elmendorf writes.

A copy of the CBO analysis is available here.

In related news, the Stamford, Conn., office of Towers Perrin Forster & Crosby Inc. has released the results of a survey of 433 human resources and benefits executives at large and midsize employers.

About 47% of the survey participants expected efforts to require employers to “pay or play” would hurt businesses, and 29% predicted their employers would respond by dropping group coverage and paying an assessment to the government if the assessment were substantially lower than providing private health coverage.

About 26% of the participants said their companies would provide coverage at the minimum required level, and 37% said their companies would provide coverage that would exceed the minimum standard.


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