Committee for a Responsible Federal Budget

CMS Analyzes House Health Care Bill

On Friday, the Centers for Medicare & Medicaid Services (CMS) released a report estimating the effects of the House health care reform bill. Looking only at the spending side of the ledger, they estimate both greater costs and greater savings than does CBO -- netting to roughly $60 billion less overall. We have compiled the differences here, but it is important to note that CBO and CMS work off of different Medicare baselines, meaning that greater savings need not mean lower overall federal spending.

 

Provisions CBO CMS
Individual Penalties ($33) ($62)
Employer Payments ($135) ($118)
Mandate Provisions ($168) ($180)
     
Exchange Subsidies $602 $596
Medicaid Expansion $425 $512
Small Business Credits $25 $11
Coverage Expansion $1052 $1114
     
Long-Term Care Insurance* ($72) ($39)
Other Spending Changes $195 $176
Other Spending $123 $137
     
Changes in Prescription Drug Payments ($83) ($117)
Medicare Advantage Cuts ($170) ($200)
Reductions in Provider Payment Updates ($173) ($229)
Measures to Slow Overall Health Care Cost Growth# ($7) ($3)
Measures to Reduce Federal Health Care Spending ($106) ($136)
Spending Offsets ($539) ($685)
     
Interactions and Other Spending and Taxes ($15) $9
Total Spending Impact $453 $395

Note: Numbers are not strictly comparable due to different baselines and other technical differences. Numbers in billions.
Sources: Congressional Budget Office, Centers for Medicare & Medicaid Services , and Authors' Calculations
*Provision raises revenue through premiums; however, due to vesting rules, the program's costs occur mostly beyond the ten year window
#Net effect of spending for and savings from efforts to slow economy-wide health care cost growth

In addition to looking at federal spending, the CMS report estimated the impact of the legislation on national health expenditures. Here is a comparison of their baseline breakdown over the next decade versus their estimates for the House bill:

[chart:1724]
 
[chart:1725]

Among the major findings of the report included:

  • The national insurance coverage provisions would cost roughly $935 billion from 2013 to 2019.
  • Thirty-four million more U.S. citizens and legal residents would have health insurance by 2019.
  • Total net savings from Medicare provisions for coverage would total about $571 billion in 2010-2019. Non-coverage Medicaid provisions would add $78 billion to the total cost. Federal tax revenues would further offset costs. The bill will reduce Federal budget deficit through 2019, the CBO and the Joint Committee on Taxation estimate.
  • A net savings of $39 billion over the next ten years is projected from the proposed Community Living Assistance Services and Supports insurance program. These savings only occur because no benefits would be paid over the first five years. Long-term costs would be greater than funds received as premiums. Additionally, the potential for adverse selection puts the program at risk.
  • Money spent on health care would increase by approximately 0.8 percent from 2010-2019. Health service providers might have trouble meeting the increased demand for their services. As a result, prices could increase, there could be cost shifting, and providers might be less willing treat patients whose insurance reimburses at a low rate.
  • The bill would not significantly slow the growth of health care cost, aside from the proposed reductions in Medicare payment updates, which are probably unsustainable. 

CRFB has recently released a new set of charts, Charts Comparing Health Care Reform Bills, to show the major metrics, costs, savings, and budget impacts of the House Democrats bill, the Senate Finance bill, and the House Republicans bill. CRFB has also recently posted Evaluating Health Care Plans, analyzing the three health care reform bills.

With a CBO report on the cost of the Senate bill scheduleded to come out this week, check back to The Bottom Line for more CRFB analysis of the health care reform bills.