National Review Corner Blog
October 7, 2009
by Tevi Troy
I've finished reading through the CBO score of the Finance Committee package, and here are some preliminary thoughts:
1. Let's be clear about what the bill does. According to CBO, the bill:
would establish a mandate for most legal residents of the United States to obtain health insurance; set up insurance “exchanges” through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage; significantly expand eligibility for Medicaid; substantially reduce the growth of Medicare’s payment rates for most services (relative to the growth rates projected under current law); impose an excise tax on insurance plans with relatively high premiums
To translate, the bill imposes a mandate for the purchase of health insurance, and gets people covered by creating subsidies and expanding Medicaid eligibility. It pays for this by cutting Medicare payments and imposing a tax on high-value insurance plans.
2. This is again a preliminary score, as they have specs, but not legislative language, from the committee. This is somewhat akin to test-driving the blueprint of a car rather than the actual car itself.
3. The bill spends a great deal of money — $829 billion — but is scored as reducing the deficit over ten years because of the offsets, which include $311 billion in taxes. In addition, the penalty on those still not purchasing insurance would be expected to bring in $1 billion a year once it's in effect.
4. The bill covers 29 million people, but still leaves a great many people uninsured — 25 million in 2019. One-third of those 25 million are likely to be illegal immigrants. According to the score, 91% of the total population would be insured by 2019.
5. We don't really know what will happen beyond 2019. As CBO puts it:
a detailed year-by-year projection, like those that CBO prepares for the 10-year budget window, would not be meaningful because the uncertainties involved are simply too great.
6. The score is based in part on assumptions regarding Congressional behavior that CBO considers unrealistic, namely that doctor-reimbursement rates would be cut by 25% in 2011 and that subsequent increases would be held below the rate of inflation. This stands in contrast to all recent history in this area, as doctors have nearly always been successful at lobbying Congress to prevent significant rate cuts.
7. This would cost the already cash-strapped states, as state spending on Medicaid would increase by $33 billion.
8. Unsurprisingly, Medicare Advantage takes a big hit, as cuts to the program will bring in $117 billion through 2019.
The Baucus people are probably happy that CBO gave them a score that didn’t increase the deficit, but that doesn’t change the fact that this remains a cumbersome and expensive way of getting at only about half (54%) of the problem of the uninsured.
Tevi Troy is a Visiting Fellow at Hudson Institute and served as the Deputy Secretary of the U.S. Department of Health and Human Services from 2007 until 2009.
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