USA's CBO revises estimate of the budgetary effects of the Senate-passed Health Bill

The USA's Congressional Budget Office (CBO) has just released an estimate of the budgetary effects of the health bill, HR 3590, that passed the Senate on December 24, 2009, which differs from the estimate for a slightly earlier version of the legislation that was released on December 19 last year.

The CBO and the Joint Committee on Taxation (JCT) now estimate that, on balance, the direct (mandatory) spending and revenue effects of enacting HR 3590 as passed by the Senate would yield a net reduction in federal deficits of $118 billion over the 2010-2019 period. (Direct spending - as distinguished from discretionary spending - is spending that stems from legislation other than appropriation acts.). In their earlier estimate, the budgetary impact was a net reduction in deficits of $132 billion.

The gross cost of the proposed expansions in insurance coverage over those 10 years is now projected to be $875 billion, reflecting subsidies provided through insurance exchanges, increased net outlays for Medicaid and the Children's Health Insurance Program (CHIP), and tax credits for small employers. Those costs are partly offset by revenues from an excise tax on high-premium insurance plans and net savings from other coverage-related sources, leaving a net cost of $624 billion for the coverage provisions. Other provisions affecting direct spending save $478 billion, on net - mostly in Medicare - and other provisions affecting revenues reduce the deficit by $264 billion, on net. Thus, the net effect on deficits of the bill as a whole equals $624 billion less $478 billion less $264 billion, or a reduction of $118 billion over the 2010-2019 period. In total, the CBO and JCT estimate that the legislation would increase outlays by $355 billion and raise revenues by $473 billion between 2010 and 2019.