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Here is the preliminary CBO estimate of the Finance Chairman's Mark (.PDF):

Sometimes it is easier to get a feel for the larger structure of the legislation from the CBO estimate than from the bill specifications themselves, which, for reference, are here (large .PDF):

CBO's commentary below.

In my opinion, the lower-than-expected cost of health reform will be the big story tomorrow.

The gross cost of subsidies and public program expansions looks to be about $774 billion over ten years.  This is more than offset by reductions in Medicare spending, an excise tax on the highest-cost health benefit plans, and various smaller taxes on health insurers and providers.  The overall package is budget neutral in year 5, year 10, and over the 5- and 10-year budget windows.  It meets President Obama's criterion of not adding a dime to the deficit.

Below is the text of a email CBO just blasted out, which explains some of the context of this estimate.

Preliminary Estimate for Senator Baucus's Proposed "America's Healthy Future Act"

CBO has just issued a preliminary analysis of specifications for the Chairman’s mark of the America’s Healthy Future Act, which was released by the Senate Finance Committee earlier today. Among other things, the Chairman’s proposal would establish a mandate for most legal residents of the United States to obtain health insurance; set up insurance "exchanges" through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage; significantly expand eligibility for Medicaid; substantially reduce the growth of Medicare’s payment rates for most services (relative to the growth rates projected under current law); impose an excise tax on insurance plans with relatively high premiums; and make various other changes to the Medicaid and Medicare programs and the federal tax code.

As estimated by CBO and the staff of the Joint Committee on Taxation (JCT), enacting the Chairman’s proposal would result in a net reduction in federal budget deficits of $49 billion over the 2010–2019 period. The estimate includes a projected net cost of $500 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $774 billion in credits and subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly offset by $215 billion in revenues from the excise tax on high-premium insurance plans and $59 billion in revenues from other sources. The net cost of the coverage expansions would be more than offset by other spending changes that CBO estimates would save $409 billion over the 10 years, and by other tax provisions that JCT and CBO estimate would increase federal revenues by $139 billion over the same period. (The $139 billion figure includes $134 billion in additional revenues estimated by JCT apart from the excise tax on high-premium insurance plans and $5 billion in additional revenues from certain Medicare and Medicaid provisions estimated by CBO.)

You may notice that CBO’s letter does not contain a figure of $856 billion, which the committee has described as the gross cost of the Chairman’s proposal. As we understand it, the committee staff arrived at that number by adding up essentially all of the positive numbers in the draft tables we provided them earlier. Thus, their use of a different total figure from ours appears to reflect primarily a different method for aggregating the underlying figures rather than different underlying figures.

By 2019, CBO and JCT estimate, the number of nonelderly people who are uninsured would be reduced by about 29 million, leaving about 25 million nonelderly residents uninsured (about one-third of whom would be unauthorized immigrants). Under the proposal, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent. Roughly 25 million people would purchase coverage through the new insurance exchanges, and there would be roughly 11 million more enrollees in Medicaid than is projected under current law. The number of people purchasing individual coverage outside the exchanges or obtaining coverage through employers would decline slightly, relative to currently projected levels.

Those estimates are all subject to substantial uncertainty. Furthermore, although we understand that the published document describing the Chairman’s mark was intended to reflect the specifications provided to us, CBO and JCT have not reviewed that document to determine whether it conforms in all respects to those specifications.

Although CBO does not generally provide cost estimates beyond the 10-year budget window, Senate rules require some information about the budgetary impact of legislation in subsequent decades, and many Members have requested CBO analyses of the long-term budgetary impact of broad changes in the nation’s health care and health insurance systems. However, a detailed year-by-year projection, like those that CBO prepares for the 10-year budget window, would not be meaningful because the uncertainties involved are simply too great. CBO has therefore developed a rough outlook for the decade following the 10-year budget window by grouping the elements of the proposal into broad categories and assessing the rate at which the budgetary impact of each of those broad categories is likely to increase over time.

All told, the Chairman’s proposal would reduce the federal deficit by $16 billion in 2019, CBO and JCT estimate. After that, the added revenues and cost savings are projected to grow more rapidly than the cost of the coverage expansion. Consequently, CBO expects that the proposal, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law, with a total effect during that decade that is in a broad range around one-half percent of GDP. The imprecision of that calculation reflects the even greater degree of uncertainty that attends to it, compared with CBO’s 10-year budget estimates.

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. For example, the sustainable growth rate (SGR) mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments. The projected savings for the Chairman’s proposal reflect the cumulative impact of a number of specifications that would constrain payment rates for providers of Medicare services. The long-term budgetary impact could be quite different if those provisions were ultimately changed or not fully implemented. (If those changes arose from future legislation, CBO would estimate their costs when that legislation was being considered by the Congress.)

(Note, CBO's pronouncements aren't protected, so the extensive blockquote isn't an issue.)

In my opinion, most of the elements of this bill could survive the reconciliation process -- that is, most major provisions wouldn't be struck from the bill for violating the "Byrd Rule," which requires certain provisions that may not be germane to budget outcomes or policy to meet a 60-vote hurdle and lead to the inevitable "Byrd droppings".

I know many elements of this particular bill are unpopular among most progressives, and I know there will be attempts to modify it in the Senate and move it closer in some respects to the House bill in conference.

But I believe even this would be a good start, which could be modified in future legislation.  I'd say it has the potential to move the U.S. health system up from a WHO ranking of 37th in the world to, I don't know, maybe 25th?

Originally posted to this is only a test on Wed Sep 16, 2009 at 12:25 PM PDT.

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Comment Preferences

  •  Story Tomorrow: Middle-Class Tax Hike in Offing (2+ / 0-)
    Recommended by:
    irmaly, derapsofphoenix

    Even Democratic Senator Rockefeller says so:

    The West Virginia Democrat worries, however, that a lot of middle class workers, like the coal miners in his state, will end up facing "a big, big tax" under the Baucus bill because they currently enjoy generous employer-provided health care benefits which they receive tax free.

    Referring to Baucus, Rockefeller said, "He should understand that (his proposal) means that virtually every single coal miner is going to have a big, big tax put on them because the tax will be put on the company and the company will immediately pass it down and lower benefits because they are self insured, most of them, because they are larger

    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

    by PatriciaVa on Wed Sep 16, 2009 at 12:31:54 PM PDT

    •  Yes, some union plans could be affected (0+ / 0-)

      Unions have been opposing this funding measure.

      At the least, I believe the excise tax proposal needs additional modification to protect certain high-cost groups (especially if there are lots of older enrollees with high health costs) from being affected.

      I'm less concerned about Goldman Sachs having to reduce their gold-plated benefits or else face a new tax...

      But perhaps in conference a portion of the House revenue increase on high-incomes could be added to offset the cost of exempting certain groups whose high health costs are no fault of their own from the excise tax.

    •  The CBO essentially demands it... (0+ / 0-)

      ...they believe it will lower costs... it's an unfortunate byproduct of being attacked at the hip to the CBO.

      DARTH SPECTER: I am altering the deal! Pray I don't alter it any further!
      LANDO REID: This deal keeps getting worse all the time!

      by LordMike on Wed Sep 16, 2009 at 01:15:46 PM PDT

      [ Parent ]

      •  Bush ignored the CBO, and was (re) Elected (0+ / 0-)

        Bush pushed through a US$ 10T unfunded liability, giving seniors prescription drug benefits.

        Didn't increase taxes on anyone.

        And, in part due to the drug benefit, won the 2004 election.

        President Obama committed a HUGE tactical mistake when he insisted on deficit-neutrality.

        Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

        by PatriciaVa on Wed Sep 16, 2009 at 01:20:07 PM PDT

        [ Parent ]

    •  and that's another reason (1+ / 0-)
      Recommended by:

      why the Baucus bill belongs in the circular file...but then I'm of the radical opinion that it's best to put trash in the garbage can...

      People were tortured to get false confessions to fraudulently justify our invading Iraq

      by grrr on Wed Sep 16, 2009 at 01:34:05 PM PDT

      [ Parent ]

    •  Face Slap (0+ / 0-)

      The Baucus Bill slaps every Democratic constituency (workers, women, poor people) square in the face.

      Thanks, Max. You've offered all of your party's supporters to the altar and received how many Republican supporters?

  •  I'm starting to develop some serious concerns (0+ / 0-)

    about the CBO itself.  I know it is an unsubstantiated opinion, but something just seems... off.  This is not meant to come off as concern trolling, but I remember back in the late '90s when Newt & Co. were lambasting CBO figures and analysis, yet now, that is all I hear from the right, about CBO says this, CBO says that - like it was handed down from on high.

    Retirement is for quiters. I have my retirement money invested in show turtles.

    by mydailydrunk on Wed Sep 16, 2009 at 12:55:37 PM PDT

  •  Everything's a numbers game (0+ / 0-)

    CBO has been criticized for underestimating savings from certain types of health proposals, like preventive care, etc.  It comes from both sides of the aisle.

    It's a very tough job, but their numbers are considered the only truly unbiased estimates in town.

    I'm starting to get a good feeling for a conference strategy on the numbers at least:

    House $1 trillion
    Senate $775 billion
    Conference (Obama's figure) $900 billion

  •  What is the CBO's projection of increased (1+ / 0-)
    Recommended by:

    revenues for private insurance companies due to this plan. If all we are doing is shifting federal funds around for the purposes of some CEO making money, who cares that it's deficit neutral?

    This is where the Progressives should get "Conservative". I don't need a federal mandate that shifts my dollars to buy insurance that doesn't eliminate preexisting conditions clauses and cancellation when I become sick.

    This meme strikes of knowing the price of everything and the cost of nothing.

    •  Actually, they do have some stuff on that (2+ / 0-)
      Recommended by:
      grrr, 57andFemale

      They have a table that shows the estimated changes in coverage by year.

      By 2016, when the provisions are fully phased in, they show 10 million more people with Medicaid, no change in the number of people with private employer coverage, a reduction of 4 million in people with private non-employer (individual) coverage, and an increase of 23 million people covered through the exchanges (which in the Baucus plan could be private coverage or nonprofit coops).

      I think all insurers, whether in exchanges or not, have to abide by the new rules on no pre-existing conditions, no coverage denials (on application), and no cancellation under any circumstances (except maybe non-payment of premium).  I'm still reading, but I'm pretty sure that's a nationwide new set of rules for all coverage.

      •  Non-payment of premium? (0+ / 0-)

        Where is the cost control? Doesn't 10 MILLION more people on Medicaid scream that we're going to create 10 million more poor people?

        For the 23 million additional customers for the insurance company, given no means to control premiums, what's going to stop the escalation of premiums (a lot like they do for auto insurance) when one becomes a less than desirable customer (they get sick)? At some point, you can't afford the premium and you get canceled. Or, you claim poverty and go on the Medicaid rolls (adding to deficit spending).

        IMO, the issue of cost control/regulation is the whole shooting match. Unless you are willing to break up the monopolies (what ever happened to the Anti-trust Division of the Justice Department?) via a Public Option, this is nothing more than a mandate for working people to patronize a corrupt insurance industry while healthy and then surrender under the claim of poverty and become a ward of the State when they become catastrophically ill (not deficit neutral).

        So if the government is ultimately going to pick up the tab of the sick and the poor anyway, what value do the insurance companies add by collecting premiums from healthy people?

        This is the classic maneuver of privatized profits and public losses.

        And of course, after stacking the deck, the conservatives will point to the fact that government is inefficient

        •  I think the 10 million more people on (1+ / 0-)
          Recommended by:

          Medicaid is because they're raising the income thresholds up to 133 percent of poverty, so that 10 million people who don't qualify now would qualify in the future.

          I think most of the new Medicaid people are likely to be relatively inexpensive to cover, actually.  Currently, Medicaid's low-income Moms and kids are relatively cheap -- the disabled and elderly enrollees in Medicaid tend to be were the high costs are.  So I'm not sure the new Medicaid enrollment would be higher cost than average.

          •  Do you see anything on premium regulation? n/t (0+ / 0-)
            •  yes, the rating is much wider than the House bill (0+ / 0-)

              The House bill allows a 2-1 difference in premium rates between the oldest and youngest people.  The Baucus bill is 5-1, a very big difference.

              Wider rating bands for age help younger people, and also help keep down the subsidy cost, since lots of younger people also have lower incomes.

              Narrower bands like the House proposal help older people, and are usually viewed as fairer (but more costly in terms of the subsidies).

  •  This is why conrad had the CBO do the 20 year... (0+ / 0-)

    ...window... he can now sell the plan as "bending the cost curve"...  it will make good press, certainly... also make it harder to fix the bad bill...

    DARTH SPECTER: I am altering the deal! Pray I don't alter it any further!
    LANDO REID: This deal keeps getting worse all the time!

    by LordMike on Wed Sep 16, 2009 at 01:14:42 PM PDT

  •  Well I guess Conrad can rest easy 'bout his 20-yr (0+ / 0-)


    We need a better method of estimating - one that looks at cost-effectiveness.

    $s spent millions covered - Baucus / Conrad bill is not effective.

    no remuneration was received by anyone for the writing of this message

    by ItsSimpleSimon on Wed Sep 16, 2009 at 01:37:27 PM PDT

  •  It's all BULLSHIT (0+ / 0-)

    How do they know?
    In 2000, did they predict we will be in the stinking ditch that we are in? Recession, no jobs, 2 wars, major deficit?
    In 1990, did they predict the surplus of the late Clinton years?

    I mean at best you can guesstimate.

    Enough crap, we need reform and a public option.

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