CBO: Reform Law Could Reduce Deficit in 2020

The Congressional Budget Office (CBO), incorporating its latest August 2010 outlook report data on the budget, estimates that the effects of the healthcare reform legislation approved in March will reduce the projected deficit in 2020 by $28 billion, with an additional $2 billion projected as well from education provisions.

CBO Director Douglas Elmendorf, responding to a query by Sen. Mike Crapo (R-ID), a member of the Senate Finance Subcommittee on Health Care, noted that the Patient Protection and Affordable Care Act (PPACA) and the subsequent reconciliation law approved by Congress will produce $143 billion in net budgetary savings between 2010 and 2019. This figure includes $124 billion in net savings for the health and revenue provisions of both laws and $19 billion in net savings.

In answer to another question, CBO estimated that the cost of preventing Medicare payment reductions to physicians under the sustainable growth (SGR) formula would be $330 billion between 2010 and 2020. This would include the 2.2% increase approved by Congress in June (through November) and allowing for subsequent inflation updates.

CBO had previously estimated that the costs of freezing payment rates at the 2009 level for six months—during the second half of 2010—and allowing for an inflation update for 2011 through 2019 for physician payment rates would total $278 billion.