The Congressional Budget Office (CBO), in its newest estimates on the Senate healthcare reform bill released on Saturday, said that gross cost would be roughly $23 billion higher ($871 billion) over the next 10 years with the new manager's amendments, compared to the $848 billion attached to the original bill presented last month.
The changes with the largest budgetary effects include:
- Replacing the insurance public plan option with "multi state plans" that would be offered under contract with the Office of Personnel Management.
- Expanding eligibility for a small business tax credit.
- Deleting provisions that would increase payment rates for physicians under Medicare.
- Increasing the payroll tax on higher income individuals and families.
Meanwhile, the payroll tax rate for individuals with income above $200,000 and for families with income above $250,000 was raised from 0.5% to 0.9%. This provision would account for a large proportion of the $26 billion increase in federal revenues over the next decade, CBO said.
Beginning in 2013, insurance policies with high total premiums would be subject to a 40% excise tax on the amount by which the premiums exceeded a specified threshold—set initially at $8,500 for single policies and $23,000 for family policies (with exceptions). The excise tax on these plans would generate about $35 billion in additional revenues in 2019, CBO said.
CBO projected a net cost of $614 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $871 billion in subsidies provided through the exchanges, increased net outlays for Medicaid and the Children's Health Insurance Program (CHIP), and tax credits for small employers. Those costs will be partly offset by $149 billion in revenues from the excise tax on high premium or "Cadillac" insurance plans and $108 billion in net savings from other sources.
By 2019, CBO estimates, the number of nonelderly people who are uninsured would be reduced by about 31 million—leaving about 23 million nonelderly residents uninsured. A third of that number would be unauthorized immigrants.
Approximately 26 million people would purchase their own coverage through the new insurance exchanges, CBO said, and roughly 15 million more enrollees in Medicaid and CHIP than is projected under current law. The number of people obtaining coverage through their employer would be about 4 million lower in 2019 under the legislation.
In a separate addendum and correction completed Sunday, CBO said that it expected Medicare spending under the bill to increase at an average annual rate of roughly 6% during the next two decades—well below the roughly 8% annual growth rate of the past two decades.