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CBO Analyzes Health Bill

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The Congressional Budge Office says enacting and implementing the current version of the Senate Finance Committee health bill as written might cut the federal deficit by $81 billion over a 10-year period.

Analysts at the CBO and the Joint Committee on Taxation have based their analysis of the “chairman’s mark” of the committee’s America’s Healthy Future Act bill on “specifications posted on the committee’s Web site on October 2, 2009, corrections posted on October 5, and additional clarifications provided by the staff of the committee through October 6,” CBO officials report.

“CBO and JCT’s analysis is preliminary in large part because the Chairman’s mark, as amended, has not yet been embodied in legislative language,” officials warn.

The version of the bill draft that the CBO and JCT analysts used would require most legal U.S. residents to have health insurance; set up insurance “exchanges” that some individuals and families could use to buy subsidized health coverage; expand eligibility for Medicaid; slash the growth of Medicare’s payment rates for most services; and impose an excise tax on insurance plans with relatively high premiums.

The expansion of health coverage would add $829 billion in costs from 2010 to 2019, but it should add $201 billion in health plan excise tax revenue, achieve $110 billion in miscellaneous net savings, lead to $404 in federal spending reductions, and lead to $196 billion in other federal revenue increases, the analysts estimate.

After 2019, if all bill provisions were implemented as now written, the provisions could lead to further reductions in the federal budget deficit, the analysts predict.

“These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation,” CBO Director Douglas Elmendorf writes in a letter summarizing the analysts’ work for Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen. Charles Grassley, R-Iowa, the highest ranking Republican on the committee. “For example, the sustainable growth rate … mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments.”

A copy of the Elmendorf letter is available here.

Baucus issued a statement welcoming the CBO “scoring” of the AHFA bill.

“Our balanced approach to health reform has paid off yet again with the news today that the
America’s Healthy Future Act remains fully paid for, begins to reduce the federal deficit within 10 years and makes significant reductions in federal debt over the next several decades,” Baucus says.

Grassley and other Republicans and the Senate Finance Committee asked Tuesday that Elmendorf and Thomas Barthod, the JCT chief of staff, come before the committee before the committee votes on the AHFA bill.

“Health care reform is a monumental task that will touch the life of every American,” the
senators write in a letter to Baucus. “Before the Committee votes to report the legislation out of Committee, it is important that all Members have a thorough understanding of
the cost of the legislation and how individuals, families, and businesses will be affected.”