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CBO and the House Bill

By July 16, 2009November 2nd, 2009Commentary

The House’s initial stab at a health reform bill has been put forward in a bill wistfully referred to as “America’s Affordable Health Choices Act”.  While the fate of the bill in committee, much less the full house, is uncertain, the Congressional Budget Office took a preliminary crack at ascertaining its cost and its impact on the numbers of uninsured.  (CBO Analysis)  Very simplistically, the bill combines various mandates for individuals and employers, incentives and penalties to encourage employment-based coverage and subsidize individual coverage, creation of private insurance exchanges with a public plan option and a dramatic expansion of Medicaid, all designed to boost coverage. 

Without considering taxes or spending reductions in Medicare contemplated by the bill, CBO finds it would increase the deficit by over a trillion dollars in the period through 2019 and would likely result in about 97% of legal residents having insurance coverage of some type.  The bill does not, however, seem to contain any significant provisions designed to address the fundamental issues underlying the growth of health costs–delivery of unnecessary care and the fee-for-service reimbursement system, which are intertwined.

Under pressure from the Administration, the House and Senate are trying to get something cobbled together which can pass.  The rush enhances the likelihood of ill-advised “reform”.  Given that everyone, including the CBO, has historically underestimated the costs of coverage expansions and government health programs, the trillion dollar price tag should have a multiplier attached to it.  Massachusetts’ current health reform woes are a clear lesson in that regard.  As we have said before, it would likely be best to figure out how to contain costs first, implement those measures and then expand coverage.

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