Dems preview details of health bill
Posted: Thursday, March 18, 2010 1:01 PM by Domenico Montanaro
Filed Under: Congress, Democrats
From NBC's Domenico Montanaro
House Speaker Nancy Pelosi gave a hint at what their proposed package of reconciliation fixes legislation will look like. She said the full bill should be posted online within the hour:
How would it be paid for:
- Cuts in "Medicare waste, fraud and abuse" totaling $500 billion
- Eliminating part of the Senate's proposed excise tax to include only a "Rolls Royce" excise tax on the most expensive, upper echelon health plans.
- A Medicare fee on "unearned income."
Some other "fixes":
- More "affordability" for the middle class
- Some members didn't like what they saw as state inequities (like the "special deals"). Instead, Pelosi said theree would be Medicaid reimbursements that are fairer to the rest of the states, including rewarding "do-gooder states," who have been out front making changes
- More insurance accountability
- Help primary care doctors who handle Medicaid cases
- Close the Medicare "donut hole"
Pelosi called the "self-executing" rule a "non-issue" and used in "regular" order and pointed to any number of times Republicans have used it -- though for nothing this large.
"We have played on their turf for so long," Pelosi said, adding, "Now they're going to be playing on the turf of the American people."
She continued, "We feel very strong in terms of where we are ... in terms of how we proceed" as well as the numbers provided by the CBO report.
She said Sunday's potential passage of health care "will sit comfortably with Social Security and Medicare.... This is history, and this is progress."
Here's the CBO's letter to Pelosi, per NBC's Shawna Thomas:
Please note that in the first page of the letter the CBO cautions that estimates presented are preliminary because the agency has not "thoroughly examined the reconiliation proposal to verify its consistency witht he previous draft." Also I did not copy and paste the tables into this hot note. those can be found at the link below:
March 18, 2010
Honorable Nancy Pelosi
Speaker
U.S. House of Representatives
Washington, DC 20515
Dear Madam Speaker:
The Congressional Budget Office (CBO) and the staff of the Joint Committee on
Taxation (JCT) have completed a preliminary estimate of the direct spending and revenue
effects of an amendment in the nature of a substitute to H.R. 4872, the Reconciliation Act
of 2010; that amendment (hereafter called "the reconciliation proposal") was made public
on March 18, 2010. The estimate is presented in three ways:
? An estimate of the budgetary effects of the reconciliation proposal, in combination
with the effects of H.R. 3590, the Patient Protection and Affordable Care Act
(PPACA), as passed by the Senate;1
? An estimate of the incremental effects of the reconciliation proposal, over and
above the effects of enacting H.R. 3590 by itself;
? An estimate of the budgetary impact of the reconciliation proposal under the
assumption that H.R. 3590 is not enacted (that is, an estimate of the bill's impact
relative to current law as of today).
Although CBO completed a preliminary review of legislative language prior to its
release, the agency has not thoroughly examined the reconciliation proposal to verify its
consistency with the previous draft. This estimate is therefore preliminary, pending a
review of the language of the reconciliation proposal, as well as further review and
refinement of the budgetary projections.
The reconciliation proposal includes provisions related to health care and revenues, many
of which would amend H.R. 3590. It also includes amendments to the Higher Education
Act of 1965, which authorizes most federal programs involving postsecondary education.
1An estimate by CBO and JCT of the direct spending and revenue effects of H.R. 3590 as passed by the Senate was
provided in a letter to the Honorable Harry Reid on March 11, 2010. That estimate is available at www.cbo.gov (and
JCT's detailed table of revenue effects is available at www.jct.gov).
Honorable Nancy Pelosi
Page 2
CBO and JCT estimate that enacting both pieces of legislation-H.R. 3590 and the
reconciliation proposal- would produce a net reduction in federal deficits of $138
billion over the 2010-2019 period as result of changes in direct spending and revenue
(see the top panel of Table 1 and subtitle A of title II on Table 5). Approximately $85
billion of that reduction would be on-budget; other effects related to Social Security
revenues and spending as well as spending by the U.S. Postal Service are classified as
off-budget. CBO has not completed an estimate of the potential impact of the legislation
on discretionary spending, which would be subject to future appropriation action.
CBO and JCT previously estimated that enacting H.R. 3590 by itself would yield a net
reduction in federal deficits of $118 billion over the 2010-2019 period, of which about
$65 billion would be on-budget. The incremental effect of enacting the reconciliation
proposal-assuming that H.R. 3590 had already been enacted-would be the difference
between the estimate of the combined effect and the previous estimate for the Senatepassed
bill, H.R. 3590. That incremental effect is an estimated net reduction in federal
deficits of $20 billion over the 2010-2019 period over and above the savings from
enacting H.R. 3590 by itself; almost all of that reduction would be on-budget (see the
bottom panel of Table 1 and subtitle A of title II on Table 5).2
The budgetary impact of the reconciliation proposal if H.R. 3590 is not also enacted
would be different. Although estimates on that basis have been completed for most of the
provisions of the reconciliation proposal, CBO does not yet have such an estimate for all
of its provisions. By CBO's estimate, the provisions that have been analyzed so far would
reduce deficits by $82 billion over the 2010-2019 period (see Table 6).
Details on the budgetary effects of the health and revenue provisions of the reconciliation
proposal, along with its effects combined with H.R. 3590, are provided in Tables 1, 2,
and 3:
? Table 1 summarizes the effect on the deficit of the health and revenue provisions
of the reconciliation proposal combined with H.R. 3590; it also shows the net
incremental effect of those provisions of the reconciliation proposal over and
above the impact of enacting H.R. 3590 by itself.
? For the two pieces of legislation combined, Table 2 provides estimates of the
changes in the number of nonelderly people in the United States who would have
health insurance and presents the primary budgetary effects of the provisions
related to health insurance coverage.
2 The reconciliation proposal would require the Secretary of the Treasury to transfer amounts from the on-budget
general fund to the off-budget Social Security trust funds to offset any reduction in the balances of those trust funds
that would result from other provisions of the proposal. As a result, the off-budget changes estimated for that
proposal represent only its effect on outlays of the Postal Service.
Honorable Nancy Pelosi
Page 3
? For the two pieces of legislation combined, Table 3 displays detailed estimates of
the costs or savings from the health provisions that are not related to health
insurance coverage (primarily involving the Medicare program) and from certain
of the revenue provisions that are not related to insurance coverage. The table does
not include the effect on revenues of title IX, a set of tax provisions whose impact
is reported separately by JCT.
Tables 4 and 5 show the incremental budgetary effects of the reconciliation proposal
(except for title IX), over and above the effects of enacting H.R. 3590 by itself:
? Table 4 presents the incremental effects of the health and revenue provisions of
the reconciliation proposal---that is, the difference between the effects of the two
pieces of legislation combined and the effects of H.R. 3590 by itself (as shown in
CBO's March 11 letter to Senator Reid).
? Table 5 summarizes the incremental effects of the health, revenue, and education
provisions of the reconciliation proposal, also assuming that H.R. 3590 has been
enacted. (The impact of the health and revenue provisions is shown in more detail
in Table 4.)
Table 6 shows the estimated effect of enacting the reconciliation proposal relative to
current law---that is, assuming that H.R. 3590 is not enacted. That table does not include
some effects that have not yet been estimated.
Effects of the Legislation Beyond the First 10 Years
Although CBO does not generally provide cost estimates beyond the 10-year budget
projection period, certain Congressional rules require some information about the
budgetary impact of legislation in subsequent decades, and many Members have
requested CBO's analyses of the long-term budgetary impact of broad changes in the
nation's health care and health insurance systems. Therefore, CBO has developed a rough
outlook for the decade following the 2010-2019 period by grouping the elements of the
legislation into broad categories and (together with the staff of the Joint Committee on
Taxation) assessing the rate at which the budgetary impact of each of those broad
categories is likely to increase over time. Our analysis indicates that H.R. 3590, as passed
by the Senate, would reduce federal budget deficits over the ensuing decade relative to
those projected under current law-with a total effect during that decade that is in a broad
range between one-quarter percent and one-half percent of gross domestic product
(GDP).3 The imprecision of that calculation reflects the even greater degree of
uncertainty that attends to it, compared with CBO's 10-year budget estimates.
3 For a more extensive explanation of that analysis, see Congressional Budget Office, letter to the Honorable Harry
Reid regarding the longer-term effects of the manager's amendment to the Patient Protection and Affordable Care
Act (December 20, 2009).
Honorable Nancy Pelosi
Page 4
Using that same analytic approach, the combined effect of enacting H.R. 3590 and the
reconciliation bill would also be to reduce federal budget deficits over the ensuing decade
relative to those projected under current law-with a total effect during that decade that is
in a broad range around one-half percent of GDP. The incremental effect of enacting the
reconciliation bill (over and above the effect of enacting H.R. 3590 by itself) would thus
be to further reduce federal budget deficits in that decade, with a total effect that is in a
broad range between zero and one-quarter percent of GDP.
Relative to H.R. 3590, the reconciliation proposal would make a number of changes that
would affect its longer-term impact on the budget. In particular, it would increase the
subsidies offered in the new insurance exchanges and would reduce the impact of an
excise tax on health insurance plans with premiums above certain thresholds. An
important component of the longer-term analysis is that, beginning in 2019, the
reconciliation proposal would change the annual indexing provisions so that the premium
subsidies offered through the exchanges would grow more slowly; over time, the
spending on exchange subsidies would therefore fall back toward the level under H.R.
3590 by itself. Another key component of the longer-term analysis is that, beginning in
2020, the reconciliation proposal would index the thresholds for the high-premium excise
tax to the rate of general inflation rather than to inflation plus one percentage point.
CBO has not extrapolated estimates further into the future because the uncertainties
surrounding them are magnified even more. However, in view of the projected net
savings during the decade following the 10-year budget window, CBO anticipates that
the reconciliation proposal would probably continue to reduce budget deficits relative to
those under current law in subsequent decades, assuming that all of its provisions would
continue to be fully implemented.
Congressional rules governing the consideration of reconciliation bills also require an
assessment of their budgetary impact separately by title. The effects of the reconciliation
proposal over the 2010-2019 period are shown in Table 5, assuming that H.R. 3590 is
also enacted). CBO's analysis of the longer-term effects, by title, is as follows:
? Most of the changes to H.R. 3590 that have significant budgetary effects would be
made by title I of the reconciliation proposal, so the conclusions about the longerterm
impact for the proposal as a whole-that it would reduce deficits, relative to
H.R. 3590-also apply to that title.
? The changes regarding health care contained in title II have a smaller budgetary
impact than those in title I, and would by themselves increase budget deficits
somewhat. That title also contains the proposal's education provisions, which
CBO estimates would reduce future deficits. In CBO's estimation, the savings
generated by the education provisions would continue to outweigh the costs
Honorable Nancy Pelosi
Page 5
related to health care stemming from title II, so that the title as a whole would
continue to reduce the budget deficit in future years.
CBO has not yet completed an assessment of the impact for the longer term of enacting
the reconciliation proposal by itself.
I hope this analysis is helpful for the Congress's deliberations. If you have any questions,
please contact me or CBO staff. The primary staff contacts for this analysis are Philip
Ellis and Holly Harvey.
Sincerely,
Douglas W. Elmendorf
Director
Enclosures
cc: Honorable John A. Boehner
Republican Leader
Honorable John M. Spratt Jr.
Chairman
Committee on the Budget
Honorable Paul Ryan
Ranking Member
Honorable Harry Reid
Senate Majority Leader
Honorable Mitch McConnell
Senate Republican Leader
Honorable Kent Conrad
Chairman
Senate Committee on the Budget
Honorable Judd Gregg
Ranking Member
