CBO Re-Estimates Health Reform Bill and Finds It's Budget Neutral

It also would create Medicare and Medicaid savings of $465 billion, coupled with the $583 billion revenue package reported by the Ways and Means Committee on Friday. It would "fully finance" the previously estimated $1.042 trillion cost of reform, which will provide healthcare coverage for 97% of Americans by 2019, the House committee leadership said. About 17 million nonelderly residents would be left uninsured (about half of whom would be unauthorized immigrants).

CBO and the Joint Committee on Taxation said that approximately $583 billion would be obtained through increasing federal revenue by methods such as issuing a surtax on higher incomes, which was approved by Ways and Means on Friday. Another $219 billion (plus physician payments) would be saved by Medicare and Medicaid by:

• Making permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee for service sector (excluding physicians’ services)—yielding budgetary savings of $196 billion over 10 years
• Setting payment rates in the Medicare Advantage program based on per capita Medicare spending in the fee for service sector—providing savings of approximately $156 billion over the 2010 2019 period.
• Changes to the Medicare Part D program to establish a new prescription drug rebate program for those eligible for both Medicaid and Medicare.

"This fulfills the strong commitment of the President and House leadership to enact health reform on a deficit neutral basis," said the release signed by House Committee Chairmen Henry Waxman (D-CA), Charles Rangel (D-NY), and George Miller (D-CA).

President Obama has previously said that he would not sign healthcare reform legislation that was not budget neutral.