The portion of a bill from Senate Health, Education, Labor and Pensions Committee Democrats that seeks to extend healthcare coverage universally will cost roughly $1 trillion over 10 years and cause 15 million people to either lose or choose to leave employer-based coverage, CBO estimated Monday.
While the estimate is incomplete -- given that some major portions of the measure are yet to be filled in, including the establishment of a public insurance option -- CBO determined the number of uninsured would fall 16 million over 10 years to between 36 million and 37 million.
State exchanges, or gateways, where people can compare and purchase insurance in a standardized format that meets certain coverage requirements, would provide coverage for about 39 million people, CBO estimated.
The analysis not only does not take into account a public option, but also could not calculate for an employer mandate or Medicaid expansion that is expected to extend to individuals and families earning up to 150 percent of the poverty level.
"Depending on their details, such provisions could also have substantial effects on our analysis," CBO Director Elmendorf wrote HELP Chairman Edward Kennedy Monday. The committee is expected to reveal the missing legislative language on the public plan and employer mandate Thursday, according to a healthcare lobbyist.
The bulk of the measure's $1 trillion price tag stems from federal subsidies offered to help individuals and families earning up to 500 percent of the poverty level purchase insurance. CBO determined that the cost would be partly offset by a $257 billion increase in tax revenues connected to the decline of employer-based insurance - which is excluded from federal taxes -- and an increase in coverage under insurance that is subject to tax; $2 billion in penalties for those who refuse to purchase coverage, and $38 billion in reductions in federal programs that could shrink when subsidies allow people to purchase their own insurance.
HELP ranking member Michael Enzi used the analysis to criticize the bill for stripping some employer-based coverage.
"Democrats keep saying that if you like the care you have you can keep it, but the facts about their bill don't support that statement," Enzi said. "CBO makes it clear -- the Democrats' plan will force millions of Americans to lose the care they have now."
CBO said about 10 million of the 15 million people who will no longer be covered under the employer-based system will be a result of people choosing more affordable coverage under the exchange. More than 150 million Americans have employer-based insurance.
The bulk of the work on how to pay for the legislation will be done in the Senate Finance Committee, which expected some preliminary CBO numbers on its version of a healthcare overhaul as early as Monday evening, a spokesman said. Finance staffers expect to brief their members on overhaul bill language Wednesday, a lobbying source said.
House Ways and Means Democrats are working on coming up with ways to pay for the effort as well. "We'll be going over numbers tomorrow," Ways and Means Chairman Charles Rangel said Monday evening.
Staffers from the House Ways and Means and Energy and Commerce committees outlined a $300 billion proposal Monday as part of the overhaul to permanently fix the flawed Medicare physician payment formula that leaves physicians facing annual cuts Congress diverts each year. Years of pushing off the cuts have resulted in a looming 21 percent reduction in January.
House Democrats plan to wipe clean the accumulated cuts and reset the baseline for the payment formula, staffers said Monday.
In 2011, physicians would be divided into two groups with separate payment formulas -- one for primary care and preventive services and another for all other services, including specialties. The proposal allows the volume of primary care and preventive services to rise at 2 percentage points above gross domestic product while all other services could rise 1 percentage point above GDP. The current formula is based solely on GDP growth, but with medical spending rising faster, the formula triggers cuts every year.
The new formula would also exclude the cost of physician-administered drugs for the calculation of total spending. Physicians have pushed to remove the cost of the drugs from the formula as drug prices have rapidly increased and eat up a disproportionate share of the total allowed spending growth.
Accountable care organizations, which are provider groups that band together to share efficiencies and quality improvements, would fall under a third payment formula.
This article appeared in the Saturday, June 20, 2009 edition of National Journal Daily.
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