US Senate health reform bill will cost an estimated $849 billion, which is less that Reps' version at $1,100 billion

The health-care reform proposed by US Senate Democrats, led by Senate Majority Leader Harry Reid (Democrat, Nevada), to extend coverage to 94% of eligible Americans, will cost $849 billion over 10 years, Senate leaders said yesterday, and slash the deficit by $127 billion over the next decade. The cost would also be considerably less than the $1,100 billion anticipated from the reforms passed recently by the House of Representatives (The Pharma Letter November 9).

While the House plans an income surtax on the wealthiest Americans, much of the funding for the Senate bill will come from a tax on high-end insurance. That so-called Cadillac tax would be assessed for plans valued at $8,500 for individuals or $23,000 for families, with higher thresholds for high-risk workers and people living in states with costlier premiums, comments the Bloomberg news service. Senator Reid settled on a Medicare payroll tax increase for some Americans, raising the rate to 1.95% from 1.45% for couples earning more than $250,000.

CBO/JCT estimates

The Senate bill got a major boost from an analysis by the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) of both the House and Senate proposals, which estimated the federal budget deficit could be cut by $127 billion over 10 years by the latter. The Senate bill would also cut the deficit by $650 million in the second decade, it was noted.