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The Baucus Bill: A Closer Look at the CBO Report

Posted By Nina Owcharenko On October 8, 2009 @ 4:29 pm In Obamacare | Comments Disabled

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Looking beyond the media hype, taxpayers should remember a few crucial facts about the recent CBO/JCT analysis of the Finance Committee’s provisions for the America’s Healthy Future Act of 2009. As former CBO Director Donald Marron has pointed out [1], there is more to CBO’s analysis than short term budget estimates.

  • The analysis is preliminary. As the letter points out, the analysis is still not based on legislative language. Moreover, Senate Leaders have to merge the bill with the HELP Committee bill before the bill comes to the floor. Therefore, it is highly unlikely that the current analysis will be relevant to the debate much past the upcoming Finance Committee vote.
  • Cost. The projected $829 billion ten year cost is no guarantee of anything. Virtually all cost estimates of government programs underestimate the true cost. Take for example Medicare. In 1965, it was projected to cost $12 billion in 1990, but its actual cost in 1990 was over $100 billion. Just recently, the SCHIP program with a fixed 10 year budget of $40 billion was reauthorized for five years at a new price tag of close to $70 billion. A long term cost projection is a missing, but important component to understanding the true cost of a proposal.
  • Taxes. The proposed offsets in the bill fall in two categories – taxes and cuts. On the tax side, CBO estimates $4 billion will be raised by imposing a tax on individuals who don’t buy government qualified coverage. $23 billion [2] will be raised by imposing a tax on employers who don’t offer government qualified coverage, a cost that will be borne by workers in lower wages and fewer jobs. Over $200 billion [3] is raised by adopting a new tax on health insurance plans. While this tax sounds like it will hit insurers, the reality is taxes on goods will ultimately be passed on the consumers. Hiding new taxes through fees and penalties [4] don’t fool anyone.
  • Cuts. The Finance proposal also depends heavily on Medicare to fund its new entitlement program. Besides cuts to Medicare Advantage plans [5], which put benefits of millions of seniors at risk, there are billions of dollars in provider payment cuts. Traditionally, such cuts rarely come to fruition. Special interests lobby to stop any real cuts from occurring after the bill is passed. Therefore, before spending one dime on coverage expansions, Congress should have to “show us the money”. If Congress were to be fiscally responsible, it would bank the savings first [6] before spending the taxpayers money.
  • Impact. Today, 85 percent of Americans have health coverage. After spending over $800 billion dollars to cover the uninsured, the Finance proposal still leave 26 million without health care coverage. And of the ones the bill reaches, the majority will be enrolled in Medicaid [7] – a program sorely in need of reform itself.

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/10/08/the-baucus-bill-a-closer-look-at-the-cbo-report/

URLs in this post:

[1] has pointed out: http://www.heritage.org/Research/HealthCare/bg2298.cfm

[2] $23 billion: http://www.heritage.org/Research/HealthCare/bg2325.cfm

[3] Over $200 billion: http://www.heritage.org/Research/HealthCare/wm2552.cfm

[4] fees and penalties: http://www.foundry.org/2009/09/16/flawed-baucus-bill-is-not-the-roadmap/

[5] cuts to Medicare Advantage plans: http://www.heritage.org/Research/HealthCare/wm2641.cfm

[6] bank the savings first: http://www.washingtontimes.com/news/2009/oct/08/butler-bank-the-bucks-first/print/

[7] the majority will be enrolled in Medicaid: http://www.heritage.org/Research/HealthCare/wm2554.cfm

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