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CBO's 'Partial' Analysis of House Health Care Bill: Over $1 Trillion

7:15 PM, Jul 14, 2009 • By MARY KATHARINE HAM
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Here's what that figure accounts for:

Among other things, those provisions 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.

And, what it doesn't account for:

The analysis issued today does not take into account other parts of the proposal that would raise taxes or reduce other spending (particularly in Medicare) in an effort to offset the federal costs of the coverage provisions...

The figures released today do not represent a formal or complete cost estimate for the draft legislation. First, as noted above, these figures do not address the entire bill...our analysis does not incorporate the administrative costs to the federal government of implementing the specified policies nor all of the proposal's likely effects on spending for other federal programs; we expect to include those effects in the near future

And, how they propose to pay for it:

A sweeping overhaul of the U.S. healthcare system to be announced on Tuesday in the U.S. House of Representatives will include a surtax on millionaires of 5.4 percent, congressional sources said.

The tax rate is higher than the 3 percent surtax lawmakers had been discussing earlier and would be imposed on those making more than $1 million a year, the sources said.

That surtax (at lower rates) would also affect income levels down to $350,000, and could "vary if the bill is less or more expensive than initially anticipated." Yes, I'm sure both the tax rate and the cost of the program will go down someday, as they so often do when you're dealing with the federal government. Ha.

The Blue Dog Democrats, on whom liberals are dependent for passing this bill, put out a letter that neither embraced the bill nor denounced it:

"The Blue Dogs are committed to passing health care reform. However, reform that does not meet
the President's goals of substantially bringing down costs is not an option.

"Over the past several months, Blue Dogs have put forth substantive policy proposals aimed at
achieving this objective, and we look forward to working through the legislative process to
incorporate these cost cutting measures."

As Phil Klein notes, 40 Blue Dogs came out against a government-run option in health care reform last week, but this letter conspicuously does not mention the government-run portion of this plan.

And, speaking of the bill's cost and the relative probability that it would go down at any point in the future (Ezra Klein, you crack me up, you card!) a friend writes in with this observation of the CBO analysis:

It shows that of the $1.04 trillion, only 8 billion is in the first three years and only 77 billion in the first four years. That means that more than 90 percent of the cost is over the last six years.

So, the average cost of the second five years is about 172 billion annually. Put another way, 85 percent of the costs are in the second five years of the bill (2015-2019)

Even if costs miraculously remained flat from 2019 and beyond (rather than rising as they do from 2014-2019), the second ten years of this bill would cost more than $2 trillion.

So…they've backloaded the costs and the consequences until after the next presidential election. They've also lowered their per-year cost by not implementing the bill until four years into their budget window.