The Congressional Budget Office has put out their analysis of the Senate’s most recent version of the health care bill. Overall it reduces the deficit by $132 billion over the next ten years and will cost $871 billion over the same time period.
(Click on the document's icon to the right to download the .pdf document or read the CBO director's notes below:)
Manager’s Amendment to the Patient Protection and Affordable Care Act
CBO and the staff of the Joint Committee on Taxation (JCT) have released an analysis of the budgetary effects of the Patient Protection and Affordable Care Act (PPACA), Senate Amendment 2786 in the nature of a substitute to H.R. 3590 (as printed in the Congressional Record on November 19, 2009), incorporating the effects of changes proposed in the manager’s amendment released earlier today. The estimate does not include the effects of other amendments adopted during the Senate’s consideration of the Patient Protection and Affordable Care Act; it also does not reflect an incremental effect on PPACA from Congressional action on H.R. 3326, the Department of Defense Appropriations Act, 2010, which was cleared earlier today. Throughout this blog entry, references to “the legislation” mean the act as originally proposed and incorporating the manager’s amendment.
The manager’s amendment would make a number of changes to the act as originally proposed. The changes with the largest budgetary effects include: expanding eligibility for a small business tax credit; increasing penalties on certain uninsured people; replacing the “public plan” that would be run by the Department of Health and Human Services (HHS) with “multi-state” plans that would be offered under contract with the Office of Personnel Management (OPM); deleting provisions that would increase payment rates for physicians under Medicare; and increasing the payroll tax on higher-income individuals and families.
Estimated Budgetary Impact
CBO and JCT estimate that the direct spending and revenue effects of enacting the Patient Protection and Affordable Care Act incorporating the manager’s amendment would yield a net reduction in federal deficits of $132 billion over the 2010-2019 period. Of that total amount of deficit reduction, the manager’s amendment accounts for about $2 billion, and the act as originally proposed accounts for the remaining $130 billion. (See our analysis released on November 18 of the act as originally proposed.)
The estimate includes a projected net cost of $614 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $871 billion in 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 $149 billion in revenues from the excise tax on high-premium insurance plans and $108 billion in net savings from other sources. Over the 2010–2019 period, the net cost of the coverage expansions would be more than offset by the combination of other spending changes that CBO estimates would save $483 billion and other provisions that JCT and CBO estimate would increase federal revenues by $264 billion. In total, the legislation would increase outlays by $366 billion and increase revenues by $498 billion between 2010 and 2019.
Effects of Provisions Regarding Insurance Coverage
By 2019, CBO and JCT estimate, the number of nonelderly people who are uninsured would be reduced by about 31 million, leaving about 23 million nonelderly residents uninsured (about one-third of whom would be unauthorized immigrants). Under the legislation, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent. Approximately 26 million people would purchase their own coverage through the new insurance exchanges, and there would be roughly 15 million more enrollees in Medicaid and CHIP than is projected under current law. Relative to currently projected levels, the number of people purchasing individual coverage outside the exchanges would decline by about 5 million. The number of people obtaining coverage through their employer would be about 4 million lower in 2019 under the legislation, CBO and JCT estimate.
The proposal would call on OPM to contract for two national or multi-state health insurance plans—one of which would have to be nonprofit—that would be offered through the insurance exchanges. Whether insurers would be interested in offering such plans is unclear, and establishing a nationwide plan comprising only nonprofit insurers might be particularly difficult. Even if such plans were arranged, the insurers offering them would probably have participated in the insurance exchanges anyway, so the inclusion of this provision did not have a significant effect on the estimates of federal costs or enrollment in the exchanges
