Ilovebenefits’s Blog

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Directly from CBO themselves

Editor’s note: The following is directly from the Congressional Budget Office (CBO). What you should notice is that the extimate is preliminary and DOES NOT include government administrative costs. Only 20 of 46-48 million uninsured will be covered. Pay particular attention to what has not been estimated, what is not included AND as some have reported this is a 10 year estimate pushing much of the burgeoning cost into the post 10 year timeframe. And while I cannot find the reference and the cite, the cost of the administrative portion of this bill, for the government to run the programs, is estimated to be in the area of $400 billion. Stay tuned here. When I find it…



CBO and the staff of the Joint Committee on Taxation (JCT) have completed a preliminary analysis of the provisions of title I of draft legislation called the Affordable Health Choices Act, which has been posted on the Web site of the Senate Committee on Health, Education, Labor, and Pensions (labeled BAI09F54.xml).

Much of title I addresses health insurance coverage. Among other things, that title would: require all legal residents to have insurance; establish insurance exchanges (called “gateways”) through which individuals and families could purchase coverage; set certain minimum requirements regarding the availability, pricing, and actuarial value of policies; and provide federal subsidies to substantially reduce the cost of coverage for some enrollees. Title I also includes provisions that, among other things, would establish a reinsurance program for early retirees and improve access to and availability of community living assistance services and supports.

Enacting those provisions would result in an estimated net increase in federal budget deficits of $597 billion over the 2010-2019 period-reflecting net costs of $645 billion for the coverage provisions, which would be partially offset by net savings of $48 billion from other provisions of title I. (CBO has also estimated the budgetary impact of provisions in titles III and VI of an earlier draft of the legislation, which would add another $14 billion to the net cost of the proposal.)

Once the legislation was fully implemented, CBO and JCT staff estimate, about 20 million fewer people would be uninsured compared with projections under current law. About 26 million individuals would obtain coverage through the new insurance exchanges, and about 6 million fewer people would purchase nongroup coverage outside the exchanges. In the aggregate, the number of people obtaining coverage through an employer would change very little.

The draft legislation does not include a significant expansion of the Medicaid program or other options for subsidizing coverage for those with income below 150 percent of the federal poverty level (FPL); such provisions may be incorporated at a later date. By CBO’s estimate, about three-quarters of the people who would remain uninsured under this version of the legislation would have income below 150 percent of the FPL.

The figures presented in this analysis do not represent a formal or complete cost estimate for the draft legislation. This estimate reflects the major provisions of the legislation but CBO has not yet completed an analysis of all of its effects. Specifically, the agency has not yet estimated the administrative costs to the federal government of implementing the specified policies or the costs of establishing and operating the new insurance exchanges, nor has it taken into account all of the proposal’s likely effects on spending for other federal programs or their potential effects on revenues from corporate taxes.

The estimated cost of this draft of the legislation is roughly $400 billion less over 10 years than the cost CBO estimated for an earlier version of the proposal (in CBO’s letter dated June 15, 2009). A number of changes in the legislation account for that difference. First, the subsidies available in the insurance exchanges would be less extensive; there would now be no premium subsidies for individuals and families with income above 400 percent of the federal poverty level, and subsidies for people below that level would be smaller. Second, a penalty (labeled an “equity assessment”) was added for employers that do not offer insurance coverage to their workers and contribute a specified share of the premium. Third, the new draft substantially limits the opportunity for employees with an offer of health insurance from their employer to receive subsidies in the insurance exchange because their employer’s offer was deemed unaffordable. Collectively, those changes contributed to a substantially lower estimate of the number of people who would purchase coverage through the insurance exchanges (and a corresponding reduction in federal subsidy payments) and led to a much smaller estimated impact on the amount of coverage provided through employment-based plans. The new draft also includes provisions regarding a “public plan,” but those provisions did not have a substantial effect on the cost or enrollment projections, largely because the public plan would pay providers of health care at rates comparable to privately negotiated rates-and thus was not projected to have premiums lower than those charged by private insurance plans in the exchanges.

CBO’s letter to Senator Kennedy is on our Web site at:–July2.pdf


July 3, 2009 - Posted by | Accountability, Cost, Federal Government, Health care delivery, healthcare | , , ,

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