CBO gave Senate Finance Chairman Max Baucus' healthcare legislation a boost Wednesday, providing a preliminary estimate that lowers the cost of the measure $82 billion from committee estimates to $774 billion over 10 years.
CBO's estimate is the cheapest of the healthcare bills to date and would eventually reduce the federal deficit by $49 billion while providing coverage for 29 million currently uninsured, which would provide coverage for 94 percent of legal nonelderly residents.
While the budget office's estimate is favorable, Democrats and Republicans in both chambers have criticized the measure. Baucus negotiated over the last three months with two other Democrats and three Republicans to craft the proposal, though none of the GOP members signed on to his mark.
The chairman said he expects the measure will have GOP support when his committee votes on it as early as next week. Baucus is meeting with Senate Democrats today to go over the mark, and Finance will begin marking up the measure Tuesday.
One of the most vocal opponents of the mark, Finance Health Subcommittee Chairman John (Jay) Rockefeller, D-W.Va., met with President Obama Wednesday following his announcement Tuesday he could not support Baucus' mark. Rockefeller takes issue, among other things, with the mark's proposal to create a co-op system of health insurance rather than a public option to compete with private plans. Obama also met with Sens. Ron Wyden, D-Ore., and Robert Bennett, R-Utah, who have co-sponsored legislation to remove the tax-exempt status of employer-based healthcare plans. Wyden has been very vocal as of late regarding the affordability of insurance premiums.
Some of the most ardent complaints from Democrats have come over the affordability of health insurance and the premiums individuals and families would be forced to pay before they become eligible for federal tax credits.
Others expressed concern with a $215 billion tax on insurance companies for high-cost plans. This likely sets up a conflict over whether to use the wiggle room created by coming in below the $1 trillion benchmark to make insurance more affordable or raise the value of which high-cost plans get taxed.
Democrats and Republicans also want to lower the fees the mark would assess on healthcare industries, particularly medical devices. The mark aims to collect $4 billion annually from medical device companies, excluding those that make the least complicated of FDA's three classes of devices.
Sens. Amy Klobuchar and Al Franken, both D-Minn., and Sens. Richard Lugar, R-Ind., and Evan Bayh, D-Ind., wrote Baucus Tuesday warning him that medical device fees would total 10 percent to 30 percent of companies' revenue and threaten jobs and innovation.
One swing vote was positive Wednesday. Sen. Mary Landrieu, D-La., said the mark is generally "moving in the right direction."
CBO Director Elmendorf blogged Wednesday that the difference between the agency's final score and the committee's $856 billion price tag is a result of committee staff adding up all the positive numbers in previous draft tables CBO provided. "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," Elmendorf wrote.
Finance Committee staffers said CBO's analysis is a net score taking into account savings as well as spending, and the committee does not question the agency's estimate.
A Medicaid expansion would total $287 billion and federal tax credits would total $463 billion, CBO determined.
Senate Budget ranking member Judd Gregg warned that the mark's budget scoring "is dependent on Congress's willingness to follow through on painful cuts they have been unwilling to follow through on in the past, including payments rates for physicians and hospital market basket cuts."
Baucus said Wednesday he hopes to fix the formula that determines Medicare physician payment rates to avoid facing annual reimbursement cuts that lawmakers reverse every year. The chairman indicated he would tackle that $300 billion challenge outside of the overhaul effort.
CBO also examined the mark's financial effect 20 years out to attempt to answer some senators who wonder whether the effort can be paid for beyond the 10-year mark.
"The added revenues and cost savings are projected to grow more rapidly than the cost of the coverage expansion," CBO wrote.
The budget office determined the mark's insurance expansion provisions totaling $147 billion in 2019 would grow at an annual rate of 7 percent through the next decade. Taxes on health industries would total $69 billion in 2019 and grow at an annual rate of 15 percent over the next decade. And finally, Medicare and Medicaid savings are expected to total $93 billion in 2019 and grow at an annual rate of 10 percent to 15 percent during the following decade. CBO cautioned the analysis is dependent on the provisions in the bill remaining the same.
This article appears in the September 19, 2009, edition of NJ Daily.