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CBO: Finance Committee Health Care Bill Would Save $81 Billion Over 10 Years

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The Congressional Budget Office delivers good, but unsurprising news to the Senate Finance Committee. They say the panel's health care reform legislation will require $829 billion in new spending--but that every penny will be covered, and, moreover, that it will reduce the deficit by $81 billion over 10 years, and then continue to reap even greater savings.

Director Doug Elmendorf writes, "According to CBO and JCT's assessment, enacting the Chairman's mark, as amended, would result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period.

All told, the proposal would reduce the federal deficit by $12 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.

That's a budget-wonk's way of saying the bill "bends the cost curve," as President Obama is fond of saying. However, though this meets all of the President's demands as far as spending, and mitigating health care inflation, it's not all roses. The bill would still leave a significant number of Americans uninsured. According to Elmendorf, "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."

That's a bit lower than some of the other bills would achieve. Nonetheless, this means that the health care reform push is likely to move forward. A negative report from CBO could have thrown the entire process into disarray.

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33 comments

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October 7, 2009 4:48 PM   

So, how much do the other bills save? How much would the 'Baucus' bill save if it had a robust public option? How much would single payer save? Is this the only criteria by which the bills will be judged?

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October 7, 2009 5:05 PM    in reply to daveincolorado

All good questions needing answers. Seems to me that adding a robust public option would make the savings even greater, would it not?

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October 8, 2009 9:20 AM    in reply to jtbear60

But it supplies NOTHING TO THE AMERICAN PEOPLE AND EVERYTHING TO HC CORPORATIONS!
No competition, no cost controls, and no pubic option with coverage cuts! If this is the bill it must be VETOED!

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October 7, 2009 5:35 PM    in reply to daveincolorado

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October 7, 2009 5:02 PM   

To say that a bill with new taxes and new spending will reduce the deficit in the long run doesn't mean it "bends the cost curve" or "mitigat(es) health care inflation."

The costs of the US health care system can continue to skyrocket, while the new taxes exceed that.

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October 7, 2009 5:08 PM   

So, how much do the other bills save? How much would the 'Baucus' bill save if it had a robust public option? How much would single payer save? Is this the only criteria by which the bills will be judged?


The CBO has already said it can't estimate the cost savings of a robust public option because its so speculative (for example, it would have to have an idea of how many people would enroll and what type of rates the public entity is likely to negotiate from health care providers). It hasn't been asked to evaluate single payer (and wouldn't do so unless there is a specific piece of legislation before it to evaluate)

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October 7, 2009 5:14 PM    in reply to richard f

Since we're discussing the topic, here's what CBO said (in brief, through the Director's Blog) in their analysis of the HELP Committee bill --

http://cboblog.cbo.gov/?p=352

Impact of a Public Plan. Another question was whether the federally administered “public plan” that would be offered under the legislation as introduced would have a substantial effect on federal spending for health care. In the legislation, the public plan would be managed by the Department of Health and Human Services, would pay negotiated rates to providers of health care, and would have to be financially self-sufficient (albeit with the government bearing some risk, as discussed below). Given those provisions, CBO’s assessment is that premiums for the public plan would typically be comparable to the average premiums of private plans offered in the insurance exchanges—and thus the existence of such a plan would not directly affect the amount of federal subsidies for health insurance under the legislation.

Nevertheless, including a public plan would probably have two small effects on private premiums, both of which would tend to lower federal subsidy payments through the exchanges to some degree. First, a public plan as structured in the introduced bill would probably attract a substantial minority of enrollees (in part because it would include a broad network of providers and would be likely to engage in only limited management of its health care benefits). As a result, it would add a small amount of competitive pressure in many insurance markets that are currently served by a limited number of private insurers. Second, a public plan is also apt to attract enrollees who, overall, are less healthy than average (for the same reasons it would attract a substantial number of enrollees). Although the payments received by all plans in the exchanges would be adjusted to account for differences in the health of their enrollees, the methods used to make such adjustments are imperfect. As a result, the higher costs of those less healthy enrollees in the public plan would probably be offset partially but not entirely; the rest of the added costs would be reflected in the public plan’s premiums. Correspondingly, the costs and premiums of competing private plans would, on average, be slightly lower than if no public plan was available

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October 7, 2009 5:15 PM    in reply to seanh

That should all be in blockquotes. I forgot that new lines break the blockquote tag.

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October 7, 2009 5:12 PM   

According to the CBO --

http://cboblog.cbo.gov/?p=332

Yesterday CBO released a preliminary analysis, conducted with the staff of the Joint Committee on Taxation (JCT), of H.R. 3200, the America’s Affordable Health Choices Act of 2009, as introduced by several House committees on July 14. Earlier this week, CBO released a preliminary report on the health insurance coverage provisions of the bill; this latest report added analysis of the other provisions. According to CBO’s and JCT’s assessment, enacting H.R. 3200 would result in a net increase in the federal budget deficit of $239 billion over the 2010-2019 period. That estimate reflects a projected 10-year cost of the bill’s insurance coverage provisions of $1,042 billion, partly offset by net spending changes that CBO estimates would save $219 billion over the same period, and by revenue provisions that JCT estimates would increase federal revenues by about $583 billion over those 10 years.

I haven't tracked down the numbers for the HELP Committee bill yet, but I will do so ASAP.

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October 7, 2009 7:02 PM    in reply to seanh

http://angrybear.blogspot.com/2009/07/tri-committee-health-care-bill-deficit.html
Per Ways and Means HR3200 when combined with a change in Pay-Go rules that scores at $245 billion means it too has a small 10 year surplus of $6 billion. I discuss in the link above, the W&M Press release is here. There is a similar one from the Speaker's office.
http://waysandmeans.house.gov/News.asp?FormMode=release&ID=919
This seems to be based on CBO staff calculations but wasn't turned into a signed score. Which created some confusion.

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October 7, 2009 7:10 PM    in reply to Bruce Webb

http://angrybear.blogspot.com/2009/07/kennedy-dodd-help-bill-with-cbo-scoring.html
Here is a link with the tables from the HELP score. It is very deceptive in that it doesn't have the revenue provisions, that strictly speaking being under the purview of finance. Once you calculate the impact of the income tax surcharge on the wealthy is would be closer in line with the others. Table in JPG form show a total deficit of $597 billion
http://1.bp.blogspot.com/_fjW71B3WLTQ/Sk4j-wVFFVI/AAAAAAAAAQc/SSwNsabHHuM/s1600-h/CBO+Dodd-Kennedy+pg.+2.jpg

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October 7, 2009 5:13 PM   

Who cares! Vote the damn thing out of this road-block committee and fix it on the Senate floor/House merger/reconciliation.

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October 7, 2009 5:14 PM    in reply to Jim H

Yes, yes, yes. No excuses. Vote, damn it. Close the curtain on this sorry chapter.

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October 7, 2009 5:14 PM   

Doug Elmendorf excluded new taxes in calculating the cost of the House health reform bill, and encouraged spin that it would add to the deficit.

But Doug Elmendorf included new taxes in calculating the cost of the Baucus bill, and encouraged spin that it would reduce the deficit.

Gee, it's almost as if Doug Elmendorf is a right-winger.

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October 7, 2009 5:26 PM    in reply to Eric Jaffa

Link? That's a pretty bold claim, considering CBO's long reputation for fair analysis. I don't necessarily doubt that there's any validity to this claim, I'd just like to see some actual reporting on this particular issue. I suspect, if there's a kernel of truth here, that you're oversimplifying the methods used.

I still find really terrifying to watch Democrats crying foul over a bill that, according to the CBO, would "substantially reduce the growth of Medicare’s payment rates for most services," would provide "federal subsidies to substantially reduce the cost of purchasing that coverage," would expand coverage "from about 83 percent currently to about 94 percent," and would "result in a net reduction in federal budget deficits of $81 billion over the 2010–2019 period."(http://cboblog.cbo.gov/?p=387)

Talk about throwing the baby out with the bathwater. So there's no public option -- boohoo. There's still a lot to like here, and if these concessions are all it takes to get meaningful Health Reform through the Senate, then I'm all for it.

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October 7, 2009 5:46 PM    in reply to seanh

This is what I'm referring to:

http://www.pianet.com/NR/rdonlyres/2B097183-1AA3-4A3B-9B5B-10035C0D0BEA/18645/CBO_071409.pdf


CONGRESSIONAL BUDGET OFFICE
Douglas W. Elmendorf, Director
U.S. Congress
Washington, DC 20515
July 14, 2009

Honorable Charles B. Rangel
Chairman
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have completed a preliminary analysis of the specifications related to health insurance coverage that are reflected in draft legislation called America’s Affordable Health Choices Act, which was released by the House tricommittee majority group on July 14, 2009.1 Among other things, those specifications would establish a mandate for most legal residents to obtain insurance, significantly expand eligibility for Medicaid, and set up insurance “exchanges” through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage. The analysis presented here does not take into account other parts of the proposal that
would raise taxes
or reduce other spending (particularly in the Medicare program) in an effort to offset the federal costs of implementing those coverage specifications.

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October 7, 2009 7:21 PM    in reply to Eric Jaffa

Yep but you can see it in the table. Here in JPG form
http://1.bp.blogspot.com/_fjW71B3WLTQ/Sk4j-wVFFVI/AAAAAAAAAQc/SSwNsabHHuM/s1600-h/CBO+Dodd-Kennedy+pg.+2.jpg

If you not the Table is headed "Preliminary Analysis of Title 1 of the Affordable Choices Act" Title 2 has all the revenue pieces.

A similar thing was done with the initial score of HR3200. On Tuesday they released a score that said "$1.048 trillion deficit" which is the number that stuck, even as they revised that on the next Friday with revenue cost savings added which reduced it down to "$239 billion deficit" which still left everyone talking about "trillion dollar deficit".

Elmendorf has played some odd games on this one for example in that same week he testified to the Senate that the bills would bend the cost curve, testimony that dominated the news cycle as the new HR3200 score, (which he surely knew was coming) was released late on Friday afternoon. Elmendorf has been around Washington too long not to understand the Friday PM news dump phenomenon.

At a minimum Elmendorf has shown himself to be a committed deficit hawk which really is not what his job is all about.

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October 7, 2009 5:26 PM    in reply to Eric Jaffa

While I certainly have no love for Elmendorf, this particular criticism isn't really fair. He wasn't given the full House bill to score, but rather just a partial version of it, sans tax hikes. I do, of course, agree that his statements after said scoring were out of line (in no small part because he didn't mention the scores were for a partial bill) but it's hard to blame the guy for the scoring itself; he took what he was given.

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October 7, 2009 7:29 PM    in reply to hunter

Well you are kind of conflating three events all labeled "Preliminary Analysis"

One was informal and based on a staff request and got released to the Press without context.
But the second was more formal he released the Title 1 score of $1.048 trillion on July 14th even though at that point he had the full bill. CBO waited until July 17 to release the much smaller $239 billion combined Title 1 and Title 2 score, which is to say in the Friday afternoon news shadow. And in between testified to Senate on July 16th on something not particularly related to Health Care per se where he freely threw in some taling points about bend points after the normal 10 year window. Now all of a sudden everyone is talking about the nice 20 year effect of Baucus's bill without similar assessment of the income tax surtax over that same period in the Kennedy-Dodd Bill.

We just are not being given Apples to Apples numbers here.

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October 7, 2009 11:18 PM    in reply to hunter

hunter -

Do you have a link regarding Doug Elmendorf not having the taxes in the House bill to score?

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October 7, 2009 5:35 PM    in reply to Eric Jaffa

Elmendorf seems blatantly partisan in his timing and methods.

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October 7, 2009 5:20 PM   

too bad the CBO didnt consider the massive risein premiums this bill will create sans public option

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October 7, 2009 5:22 PM   

does this include the public option?

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October 7, 2009 5:24 PM   

Any numbers that fly out of Washington for many many years now have all been "fuzzy math" that we somehow keep buying.

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October 7, 2009 5:24 PM   

What difference does it make how it costs or saves if the bill, itself, is crap. That what this bill is. Without an accessible and robust PO, no bill is worth anything.

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October 7, 2009 5:26 PM   

so, when it comes to the MORAL issue of taking care of our fellow citizens it's all about being penny-wise

yet when it comes to occupying other countries it's all about being pound-foolish, and besides the wasted money on contractors there's billions that simply disappeared that we'll never know where it ended up

good thing we have our priorities straight. America just doesn't have money to throw around. I mean how will we continue to bail out the banks if we misappropriate it on people?

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October 7, 2009 5:45 PM   

I'm helping with the deficit reduction. Due to my age, using the Baucus bill, my insurance premium will increase to $34,737.36 per year! No penalties are included in this figure but obviously, a single coverage, high deductible policy for a 60 year old will be one of those "cadillac" plans. My income is over 400% of the poverty level so I'm not eligible for a subsidy but my health insurance premium will be 61% of my gross pay.

This is reform like I've never seen before. I'm going to have to drop my insurance within the next 6 months anyway because I'll be completely out of savings paying for the premium I have now. Sure hope the insurance companies enjoy all their new profits.

Wouldn't it be nice if Baucus and friends lived in the real world?

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October 7, 2009 6:50 PM    in reply to Andreams

What are you talking about? According to the Finance bill, the community rating for age (4:1) means your premiums can be no more than 4 times the lowest premium for the youngest policy holders, which will certainly be a LOT lower than $34.7k/4.

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October 7, 2009 6:53 PM    in reply to Andreams

In other words, if premiums for the youngest policy holders are $2k per year, yours could be no more than $8k. There's also talk that the community rating could be lowered further as the bill is merged with the HELP committee and House versions.

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October 7, 2009 6:03 PM   

True Christians are the ones that want health care for all. Is Sean Hannity a true Christian? Must see video below.

http://progressnotcongress.org/?p=3080

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October 7, 2009 6:55 PM   

I bet $81B is nothing compared to what we'd save with Medicare for all or any other kind of single payer system. Pity noone is calling for a CBO study of that.

Also, I pretty skeptical the government is going to be able to enforce a lot of the regulative language in the bill.

This is placebo reform unless they can get a public option like that envisioned by Jacob Hacker, modeled on Medicare but with increased benefits. He talks about pre-enrolling millions of government covered employees, Medicaid/SCHIP recipients, uninsured Americans (max. premiums - $70/mo. individuals, $200/mo family) creating an enormous risk pool. We'd spend less, get more. Most small group plans would be eliminated. It might save as much as $1T over 10 years using Medicare costs. If employers don't offer insurance, they have to pay a tax.

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October 7, 2009 7:35 PM    in reply to Tanjaoui

Watch what you ask for. Under CBO scoring rules any Single Payer system is going to look bad because most of the initial cost savings are going to employers, individuals and states. And those savings are not scored by CBO. On paper it will just look like a huge bump in spending which one way or another will have to be offset by a huge bump in taxes. That the country as a whole would be saving money and more over time will be swamped by the OMFG! headlines reacting to the raw numbers.

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October 10, 2009 7:44 PM   

What do you expect, they make the laws. They can hammer us any way they want too. This health care bill is a smoke screen to keep the approval rating up above 50%. We can't afford all this spending simple as that and if we do. We pay for it in the future.
Two Voices | Two Guys

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