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CBO: Latest Health Reform Bill Would Cost $940 Billion

Janice Simmons, for HealthLeaders Media, March 18, 2010

House Democrats got some good news today with the eagerly awaited Congressional Budget Office (CBO) results on the healthcare reform bill that the House could vote on as early as this weekend.

CBO reported that over the next decade, the new bill, which makes changes or fixes in the Senate bill, would save $138 billion. This amount is $20 million more than the CBO projected for the bill that was approved by the Senate on Christmas Eve.

The clock now starts ticking for 72 hours before House Democrats can bring the legislation to the House floor. That time would be Sunday at the earliest. At least 216 votes will be needed to ensure passage in the House.

House Majority Whip James Clyburn (D-SC) said on Sunday that the House Democrats did not have the votes, but today he seemed optimistic that the votes needed would now be there.

The gross cost of the bill is $940 billion during the next decade, which includes:

  • $434 billion for Medicaid and Children's Health Insurance Plans

  • $466 billion for exchange subsidies and related spending

  • $40 billion for small employer tax credits

CBO does caution, as with its other projections, that the figures are preliminary.

Relative to HR 3590 (the Senate bill approved in December), the House reconciliation proposal would make a number of changes to affect its longer term impact on the budget, CBO said. In particular, it would increase the subsidies offered in the new insurance exchanges and would reduce the impact of an excise tax on health insurance plans with premiums above certain thresholds.

The net cost of coverage now ($794 billion over 10 years) would come from penalty payments from uninsured individuals ($17 billion); penalty payments by employers that do not purchase insurance ($52 million); excise tax on high-premium insurance plans or "Cadillac plans" ($32 billion); and other effects on tax revenues and outlays ($44 billion).

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