How Much Will Health Reform Cost?

UPDATE: CMS released its estimates of the final Senate bill on Friday.

The short answer is that it depends who you ask. Today, the RAND Corporation released their own analysis which found that the coverage provisions of the House bill would cost around $1 trillion over ten years -- and $181 billion in 2019. This includes $445 billion in insurance subsidies and another $559 billion in $559 billion in new Medicaid costs*.

These estimates differ somewhat, though not too substantially, from the estimates we have graphed using CBO data -- as well as other estimates put forth by the Center of Medicare & Medicaid Services and The Lewin Group.

[chart:2001]
Note: These estimates may not be strictly comparable.

Interestingly, while the House bill costs more than the Senate bill, the Senate bill appears to grow faster. According to both the CMS and Lewin estimates, in fact, the Senate bill will cost more than the House bill by the end of the ten year budget window.

 Ten Year CostCost in 2019
 HouseSenate+HouseSenate+
CBO$1051$871$207$199
CMS$1053$95998$190$20111
Lewin$1083$957$198$202
RAND$1004n/a$181n/a
+Lewin and CMS estimates not based on final version of the bill.

Of course, the gross cost of coverage provisions does not tell the whole story. Both bills include other provisions which would add significantly to their costs. They also come with offsetting spending reductions and tax increases meant to pay for the new spending -- and other reform measures designed to slow health care cost growth. But that's a discussion for another day.

*The RAND analysis estimates Medicaid costs imposed on States, as well as the federal government. However, their analysis does not include the costs of the small business tax credits, retiree reinsurance, or high-risk pool funding. Based on a Lewin analysis, we estimate these factors would roughly cancel out.