Senate Finance Committee To Vote Next Week, Baucus Praises CBO Cost Estimate

The Senate Finance Committee will meet Oct. 13 to consider the panel’s health care overhaul plan, chairman Max Baucus announced today.

Yesterday, the Congressional Budget Office released an analysis of the bill saying that over time, it would lower the deficit, cost less than President Barack Obama’s threshold, and would expand coverage to millions of uninsured Americans.  

In a letter to Baucus CBO Director Doug Elmendorf said that, over the next decade, the bill would cost $829 billion and  lower the federal deficit by $81 billion. The bill would provide subsidies to help low-income individuals purchase health insurance through health insurance “exchanges” and increase Medicaid eligibility to 133 percent of the federal poverty line, which is about $14,000 for an individual or $29,300 for a family of four.

Excluding unauthorized immigrants, the number of legal nonelderly residents with insurance coverage would rise from 83 percent now to 94 percent over the next 10 years, according to CBO. The cost of the measure, CBO said, would be partially offset by $201 billion in revenues from an excise tax on high-premium insurance plans and $110 billion in net savings from other sources.

“A Bill That Can Garner 60 Votes”

In a statement Baucus called his bill “a smart investment on the federal balance sheet” that would improve and expand health care coverage for tens of millions of Americans. 

“Health reform will modernize the health care system for the 21st century by reducing inefficiencies, focusing on quality and ensuring we are getting the best bang for our health care buck,” he said. “Health reform should be fiscally responsible as it expands and improves coverage and these numbers reiterate that real reform can be just that. “

Senate Majority Leader Harry Reid, D-Nev., said that once Finance acts on the measure,  it would be merged with legislation approved by the Senate Health, Education, Labor and Pensions Committee. “We’ll work with the White House and the chairmen of the HELP and Finance Committees to craft a bill that can garner 60 votes,” Reid said.

“Not Much Bang For The Buck”

The panel’s ranking Republican member, Sen. Charles Grassley of Iowa was skeptical. “I worry that some of my colleagues will focus only on the deficit-neutral piece of CBO’s document,” he wrote, in a statement released by his office. “A celebration of the deficit effects masks who pays the bills. This package includes hundreds of billions of dollars in new taxes and fees. Most Americans with health insurance will see their premiums increase. That’s according to CBO and JCT [the Joint Committee on Taxation], the non-partisan experts. Premiums would increase as early as 2010, before most of the health reforms, including tax credits to help people pay for health insurance, take effect.”

Grassley, who negotiated with Baucus for months over the bill’s provisions, had nothing positive to say about the CBO score:  “Uninsured individuals would pay a tax for not obtaining government-approved health insurance. Employers who already offer health insurance would face a penalty if their workers choose subsidy-eligible insurance. With all of this, the bill spends nearly a $1 trillion and still leaves 25 million people without health insurance. That’s not much bang for the buck. ”

The Blue Cross and Blue Shield Association said Wednesday that it is “difficult to understand” why the CBO estimate did not show a greater impact from “significant” changes the Finance panel made to the individual mandate. By a vote of 22 to 1 the committee voted to delay for one year any penalties for not having insurance then phase them in over a four-year period.

“Amendments approved during the Senate Finance Committee mark-up eviscerated the individual mandate – completely eliminating it in 2013, significantly lowering penalties to the point that it will only represent about 15 percent of the cost of a premium by 2017,” the insurance group said in a statement.

“A weak mandate, as included in the amended Senate Finance Committee bill, would encourage people to wait until they are sick to purchase coverage.  This will drive up premiums for everyone,” the group said.

Expanding Insurance Coverage

Under the Finance package the federal government would cover, on average, about 90 percent of the Medicaid expansion and states would be required to maintain current coverage levels of children under Medicaid and the Children’s Health Insurance Program (CHIP) through 2019. Beginning in 2014, states would receive higher federal reimbursement for CHIP beneficiaries, increasing from an average of 70 percent to 93 percent. State spending on Medicaid would increase by $33 billion over the next 10 years, reflecting states’ flexibility to make changes to the program.

Over the next decade, CBO said, the government would spend $345 billion more on Medicaid and CHIP and $461 on federal subsidies to help eligible individuals buy coverage. By 2019,  the number of nonelderly people who are uninsured would be reduced by about 29 million, leaving about 25 million nonelderly residents uninsured, although about one-third of that figure would be unauthorized immigrants.

Roughly 23 million people would purchase health insurance through the health insurance exchanges and there would be roughly 14 million more enrollees in Medicaid and CHIP. Proposed health care “co-ops” had “very little effect” on the estimates of total enrollment because “they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments,” CBO said.

In his letter to Baucus, Elmendorf noted that the Finance package “has been changed in a number of significant ways” during the committee’s deliberations and that CBO and the Joint Committee on Taxation were able to provide estimates for many of the bill’s amendments. Elmendorf also noted that the estimates could change significantly once Baucus’ plan was converted into legislative language.