The House passed health care reform 220-215 last night – a landmark bill that could decrease the uninsured by as much as two thirds. The Congressional Budget Office estimates that the bill will decrease the federal budget deficit by $109 billion over the next 10 years. The Senate is not yet ready to pass its health care reform bill, and after it does, the bills will need to be reconciled – so the final bill that emerges could look substantially different. But let’s examine - if this bill became law, what would it likely do to health care costs?
I reviewed the likely impact of the Baucus Senate bill on overall health care spending – using analysis from the CBO, in a post last month. Essentially – the deficit goes down even while the cost of health care continues to rise. That’s because the government is collecting taxes and penalties to fund all of the increase that is not funded by cuts in government health care spending (mostly on Medicare).
Here is a breakdown, again from the CBO, of the House reform bill (that is very similar to what ultimately passed on Saturday night. (Note that I have simplified this a bit – and there are rounding errors)
According to the CBO, the total amount of incremental dollars going into the health care system over the next ten years will be $633 billion ($1.06 trillion minus the $427billion in Medicare and other cuts). And that’s assuming that these cuts will “stick.” There is also the additional $210 billion required to reverse the “sustainable growth revenue”(SGR) formula that would require 21% Medicare physician pay cuts this January, and continued smaller decreases for many years to come.
The House health care reform bill is a political success – it has already gotten further than the Clinton Health Plan in 1994. It’s also a policy success - increasing access to coverage, providing subsidies to bring healthy and middle class people into the system, and enacting regulations to protect against some health insurance practices that have frozen the sick out of our system. Assuming this bill, or something like it, passes – the next big job will be figuring out how to lower the cost of health care!
