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CBO on the House Tri-Committee Health Plan

July 15th, 2009 . by economistmom

The Congressional Budget Office has been working hard to shed “preliminary” light on various pieces of the House “Tri-Committee” health reform plan.

Yesterday’s analysis focused on the cost of the provisions designed to increase health insurance coverage.  As CBO director Doug Elmendorf summarized on his blog (emphasis added):

[O]ur preliminary assessment of the coverage provisions’ budgetary effects and their likely impact on rates and sources of insurance coverage for the nonelderly population [indicates that] enacting those provisions by themselves would result in a net increase in federal budget deficits of $1,042 billion over the 2010–2019 period. By 2019, CBO and the JCT staff estimate, the number of nonelderly people who are uninsured would be reduced by about 37 million, leaving about 17 million nonelderly residents uninsured (nearly half of whom would be unauthorized immigrants).

That implies a ten-year increase in budget deficits of about $28,000 per newly-insured person–to substantially increase coverage over the last 7 years of the ten-year budget window.  (The policy is estimated to achieve most of the increase in coverage by 2013-15.)  That’s about $4,000 per extra person-year of health insurance coverage.  Given that the average annual premium that employers pay for their employees’ health insurance is around $4,700 per person according to the National Coalition on Health Care, by that metric at least, the cost of this part of the health reform proposal (designed to increase coverage) seems pretty reasonable.

But a trillion dollars over the first ten years, when the policy doesn’t really kick in for a few years, is still a lot of money.  And the Obama Administration and Congress seem determined to offset this cost with a combination of tax increases and spending controls/cuts.  How are they doing in that regard?  More on that tomorrow.

One Response to “CBO on the House Tri-Committee Health Plan”

  1. comment number 1 by: murf

    If the U.S. acts anything like the state of California (and they do). If this stupid legislation passes the projected savings will be smaller than expected, the costs will be greater and the outcome for the country will be low/no/negative growth which will ultimately lead to a lower standard of living. There is just no getting around the numbers.