Problems With the CBO Healthcare Reform Scoring

Don’t be so fast to celebrate the CBO scoring.

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By Peter Roff, Thomas Jefferson Street blog 

There are still a few hurdles to be overcome before the Democrats can declare victory in the battle over the national healthcare bill. Most of the reliable vote counts circulating on Capitol Hill show Speaker Nancy Pelosi is a few votes short of what she needs to win--and that about 20 Democrats are still on the fence. 

The release today of a preliminary estimate of the direct spending and revenue effects of "an amendment in the nature of a substitute to H.R. 4872, the Reconciliation Act of 2010" by the Congressional Budget Office shows the healthcare proposal will produce a net reduction in the federal deficit--which may help satisfy the concerns of the few remaining holdouts who cite the potential cost of the bill as their principal concern. But even that is sketchy.

In releasing its numbers, the CBO cautioned it had not "thoroughly examined the reconciliation proposal to verify its consistency with the previous draft" of the bill it had already scored. "The estimate is therefore preliminary, pending a review of the language of the reconciliation proposal, as well as further review and refinement of the budgetary projections." 

In other words, the figures it released aren't exactly written in stone. 

The CBO letter points out some other issues, as identified by Chris Jacobs, a health policy analyst for the Senate Republican Policy Committee, that members will have to deal with, including: 

• Spending on coverage expansions would rise by $48 billion for Medicaid expansions when compared to the recently updated score of the Senate passed bill, and $17 billion on subsidies, for $65 billion total. This new additional spending would reduce the number of uninsured by only about 1 million in 2019. 

• The Cadillac tax would be reduced by $117 billion, from $149 billion in H.R. 3590 to $32 billion under reconciliation. Note also that the bill would reduce the inflation threshold from the consumer price index (CPI) plus one percentage point to CPI, beginning in 2020. Some may also view this as either a budgetary gimmick to reduce the bill's long-term costs, or a massive tax increase on the middle class in future years—long after President Obama will leave office. 

• The bill includes additional Medicare savings proposals, including market-basket adjustments that would grow over time. The reconciliation bill itself includes $60.5 billion in additional Medicare reductions, raising the total to $523.5 billion. 

• The reconciliation bill contains a total of $155.8 in new tax increases, although a breakout of these numbers is not yet available. 

• The scoring provisions appear to provide a temporary increase in Medicaid payments for primary care physicians—however it would also appear that this increase expires in the budgetary "out years," raising additional questions about how Medicaid payments will be cut (and beneficiaries will be affected) in the years after 2014—right when Medicaid is expected to enroll an additional 16 million individuals. 

All of these pieces are substantial enough to almost force continued negotiations. Some provisions may be changed or even stripped out by the Senate when it takes up reconciliation--meaning the CBO score released today will not be the last word on the subject. It also means the promised "fixes" to the Senate-passed healthcare bill may never actually materialize--something that no doubt will be brought to the attention of wavering House members many times over the next few days. 

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