CBO: Health Care Overhaul Would Cost $940 Billion
Updated: 11:56 a.m.
An analysis of the Democratic health care overhaul by the Congressional Budget Office released Thursday morning shows it would cost $940 billion over a decade, slice $138 billion from the deficit and expand insurance to 32 million people.
The CBO report shows that the plan cuts the growth of Medicare costs by 1.4 points per year while eliminating the “doughnut hole,” Democrats said. Those cuts would extend the solvency of Medicare for at least nine additional years.
The 24-page CBO report, labeled as a preliminary estimate, said that the reconciliation package of “fixes” shrinks the deficit by $20 billion more than the Senate-passed bill in the first decade and as much as a quarter percentage point of the gross domestic product in the second decade. That additional savings, along with the additional coverage, could buoy support among both fiscally conservative and liberal wings of the Democratic Caucus.
Total savings in the second decade would be about one half of a percentage point of GDP, which Democrats said amounted to a whopping $1.2 trillion.
Speaker Nancy Pelosi (D-Calif.) described Democratic lawmakers as “very pleased” with the numbers after a morning meeting in which leaders presented them to the rank and file. “We told them that we’d stick with this bill until we had the savings that we thought were necessary, and we took some time, but we’re very pleased that our $1.2 trillion in savings is even more savings than the Senate bill,” Pelosi said. “So we’re making even more progress.”
The CBO said Democrats tweaked their reconciliation bill to ramp up subsidies and scale back the tax on high-cost health plans in the first decade, but would do just the opposite in future decades to make the numbers work. Starting in 2019, subsidies for purchasing insurance would grow more slowly than the Senate’s original bill, and the tax on high-cost “Cadillac” health care plans would be indexed to general inflation instead of inflation plus 1 percent. Those tweaks, the CBO said, resulted in CBO scoring the long-term effects of the bill as probably reducing the deficit.
That’s key, because reconciliation bills must reduce deficits in the long term under rules adopted by Senate Democrats, or else the bill could have faced 60-vote points of order.
With the CBO score in hand, Democrats can now move ahead with a vote on the package, which is expected on Sunday.
Tory Newmyer contributed to this report.