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I heard that...

...the bill will reduce the deficit. Is that true?

The cost estimate of by the Congressional Budget Office (CBO) shows that the bill will reduce the federal deficits $143 billion over 10 years.

On March 20, 2010 the CBO released the cost estimates for the Patient Protection and Affordable Care Act (PPACA), which includes the Senate bill, H.R. 3590 and the Reconciliation Act of 2010. The CBO estimates that $124 billion will be saved directly from health reform savings and revenue efforts, the remaining $19 billion will be savings from education policies included in the Reconciliation Act.

PPACA will include measures to reduce federal healthcare spending, such as:

  • Disqualify insurance companies that increase their costs too much from participating in the insurance exchanges
  • Remove the antitrust exemption from insurance companies
  • Change certain biofuels rules This is a source of unrelated revenues being applied to healthcare reform
  • Increase Medicaid support of home care in preference to nursing home care
  • Provide additional funding for prevention through a Prevention and Wellness Trust
  • Provide screening, brief intervention, referral, and treatment for mental health and substance use disorders
  • Establish minority health sections in several agencies, with provision to eliminate any duplication with existing programs
  • Establish diabetes screening, collaboration, and outreach
  • Improve collection of vital statistics

The CBO's scoring of PPACA for 2010 - 2019 show:

$788 billion
 net cost from expanding insurance coverage
-$511 billion
 net reduction in federal spending
+$420 billion
 in new revenue
$143 billion
 savings over 10 years

In other words, if the estimates are accurate, the CBO scoring indicates that over 10 years, the bill would make money and reduce the federal debt. There are issues with the accuracy of the CBO’s scoring of health bills. For more information about that, see “I heard that healthcare reform will cost $1.6 billion. Is that true?”, our answer about the cost of earlier healthcare reform bills.

H.R. 3962 does not contain a solution for the Medicare Sustainable Growth Rate (SGR) physician payment problem. That issue is now addressed by H.R. 3961.

Sources

Elmendorf, D. (2010, March 20). Letter to Nancy Pelosi. Congressional Budget Office. Available at: http://www.cbo.gov/ftpdocs/113xx/doc11379/Manager'sAmendmenttoReconciliationProposal.pdf

 

Since 1997, The Health Foundation of Greater Cincinnati has invested over $111 million in projects that improve the health of the Cincinnati area. With major healthcare reform imminent, the Health Foundation aims to be a source for credible, timely information that can inform people in our region about the healthcare reform debate. While we do not support any specific plan or approach, we do support certain principles that we believe would improve access to healthcare and make our region healthier.

The Health Foundation supports a healthcare system that:

Please visit http://www.healthfoundation.org/reform for more information.