Is What I Hear True?

I heard that...

...Senator Reid’s bill will reduce the deficit. Is that true?

The preliminary cost estimate of Substitute H.R. 3590 by the Congressional Budget Office (CBO) shows that the bill will save money over a 10-year period, which the CBO says will reduce the federal debt.

Senator Harry Reid released a new Senate bill, Substitute H.R. 3590, on November 18, 2009. Prior to this, there were two Senate bills: S.1679, Affordable Health Choices (also called the “Kennedy Bill”) and S. 1796, America's Health Futures Act of 2009 (also called the Senate Finance Committee Bill or the Baucus Bill). If Substitute H.R. 3590 passes the Senate, it will replace S. 1679 and S. 1796. The full text of Substitute H.R. 3590 is available at: http://democrats.senate.gov/reform/patient-protection-affordable-care-act.pdf. A summary of the bill is available at: http://dpc.senate.gov/dpcdoc-sen_health_care_bill.cfm.

Estimated Cost of H.R. 3590

On November 18, 2009, the Congressional Budget Office (CBO) scored Substitute H.R. 3590. The CBO document is available at: http://www.cbo.gov/ftpdocs/107xx/doc10731/Reid_letter_11_18_09.pdf.

The CBO's preliminary scorings of Substitute H.R. 3590 for 2010-2019 show:

$848 billion	gross cost of insurance coverage expansion
-149 billion	revenues from taxes on high-premium insurance plans
-100 billion	savings from other sources
$599 billion	net cost from insurance coverage provisions
-491 billion	other offsetting spending changes
-238 billion	increases in federal revenues
-$130 billion	net 10-year decrease in the federal budget deficits

In other words, if the estimates are accurate, the CBO scoring indicates that 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.

If H.R. 3590 passes as originally written, there will be 18,000,000 million Americans—or 6% of the population (excluding unauthorized immigrants)—who would be uninsured in 2019.

H.R. 3590 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. (2009, November 18). Letter to Harry Reid. Congressional Budget Office. Available at: http://www.cbo.gov/ftpdocs/107xx/doc10731/Reid_letter_11_18_09.pdf

In the Senate or House, a “substitute bill” uses a previously established bill number, but replaces the content of the bill with new provisions. Substitute H.R. 3590 is a Senate bill despite having a House of Representatives prefix because the original bill had been approved in the House and was passed to the Senate for consideration, where Senator Reid made the replacement.

 

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