October 20, 2014

Summary Numbers for Health Care Reform Legislation

When we finished our issue brief on the health care reform "endgame" before the holidays, we had a difficult time trying to isolate the key 10-year costs and savings of different components of the legislation. Now that we have had a bit more time with the final House and Senate versions of the legislation and the CBO analyses, we wanted to present the following table:

 House BillSenate Bill
Insurance Coverage Expansion1052871
   
Minus Offsets  

Spending Cuts

352413
CLASS Act10272
Tax Increases570474
Penalties16843
Subtotal (offsets)1,1921,002
   
Deficit Reduction-138-132

You can read the brief for the details about these costs and offsets, but the bottom line, and how we get there, is important to highlight again.

Over 10 years, the official CBO score of both bills is that they would reduce the deficit by just over $130 billion. That takes the cost of the health insurance subsidies and Medicaid increases responsible for increasing coverage to the uninsured, and then subtracts the offsets from that cost. Because the offsets bring in more money than the total costs, the result is deficit reduction.

It is important to mention that without the CLASS Act "offset" -- which is an accounting gimmick -- the 10-year deficit reduction is dramatically reduced. It also bears noting that while the Senate bill appears to "cost" less than the House bill, this difference is almost entirely because the Senate insurance provisions are implemented one year later (2014 vs. 2013). By 2019, when both bills are in full effect, the House bill only costs $8 billion more than the Senate bill.

Finally, the discussion of the 10-year costs should not eclipse the more important questions of whether health care reform will lower the deficit beyond then, and whether it will do anything to ultimately lower health care costs and health care cost inflation. Our brief highlights the major issues still to be finalized in the legislation that will have the largest impact on these questions. Diane and I also recorded a short video summary -- watch it here.