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CBO Scores Revised House Health Care Bills

October 16, 2009 - by Donny Shaw

The Congressional Budget Office (CBO) is out with some preliminary budget numbers for two competing versions of the House health care bill that suggest things are moving in the right direction for meeting President Obama’s requirements. Changes that the House has made over the past couple months have trimmed $300 billion off the bills’ price tags and brought them down to be right in line with Obama’s total cost target of $900 billion over ten years.

The CBO’s didn’t look at the revenue side of the bills, but we already know that they are written to be deficit neutral – another of Obama’s requirement for the health care bill. The report is not publicly available yet, but it’s been leaked to the Washington Post. Here’s what they tell us:

The report from the Congressional Budget Office, a copy of which was obtained by The Washington Post, puts the cost of one plan at $859 billion over the next decade and the other at $905 billion. The cheaper version would rely heavily on a more dramatic expansion of Medicaid, the government health plan for the poor that is funded partly by the states — meaning already-strapped governors would have to pick up more of the cost of reform.

Compared with the original package, the two new proposals would offer less generous subsidies for people who need help buying insurance and do not have access to affordable employer coverage. Additional savings would come from reducing employer tax credits.

Both packages are based on the original House framework, which proposes to extend coverage to more than 30 million Americans by expanding Medicaid eligibility and subsidizing private insurance for people who lack access to affordable coverage through an employer. Each would expand the ranks of the insured to more than 95 percent of Americans by 2019, and each would create a government-run insurance plan to compete with private insurance companies.

Under the $905 billion version favored by liberals, compensation rates for medical providers in the government-run insurance plan would be based on Medicare rates, which are significantly lower than private rates. That idea, which Senate liberals also support, would hold down costs for the government, according to the CBO, but it would create a problem for providers in rural areas where Medicare rates tend to run much lower than the national average.

Under the $859 billion version, administrators would negotiate rates directly with doctors and hospitals, the option preferred by moderate Democrats from rural areas.
In addition, the $859 billion proposal would shift millions more people onto Medicaid instead of offering them federal subsidies to buy private insurance. Those who purchased insurance would also get slightly less generous coverage.

These numbers all look really good when you compare them with the CBO’s scoring of the Senate Finance Committee’s health care bill. Chris Bowers at Open Left summarizes – “both House bills cover more people, at a lower cost per person covered, with politically realistic funding mechanisms, and with higher subsidies for people purchasing insurance” than the Senate Finance bill. “If the health care debate in the Senate had anything to do with the soundness of policy, numbers this would end it.”

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