CBO Analysis of House Health Reform Bill

A Congressional Budget Office (CBO) analysis published subsequent to the bill's release yesterday estimates the bill's cost at $894 billion between 2010 and 2019, and forecasts it would reduce the federal deficit by more than $100 billion during the same period. Of the bill's costs, $425 billion would be incurred in federal outlays for Medicaid and CHIP and $605 billion would go out in federal subsidies provided to purchase coverage through the new insurance exchanges.

The bill's cost would be funded via combination of $426 billion in cuts to Medicare, Medicaid and other federal health programs and a surtax on the "wealthiest Americans" - a 5.4% surtax on the adjusted gross income of individuals making more than $500,000 and married couples making more than $1 million, which is higher than the thresholds in the previous version. Additional new revenue raisers would include a 2.5% excise tax on certain medical devices, penalties from individuals failing to obtain or provide insurance coverage and a payroll tax on employers failing to offer health insurance to employees.

CBO estimates the public plan option approach included in the bill would likely charge similar or even higher premiums compared with private plans in the new insurance exchanges, and forecasts that the public plan option would attract only 6 million enrollees.