The Congressional Budget Office continues to make news with its cost estimates for pending health care legislation. In a letter to Rep. Paul Ryan (R-WI) yesterday, CBO ran the numbers for HR 3961, the Medicare Physicians Payment Reform Act of 2009, which passed the House later in the day. The upshot: this bill spends more than the health care bill passed by the House a couple of weeks ago saves. Taken together, this bill and the health care bill passed by the House on November 7 (Affordable Health Care for America Act, HR 3962) “would add $89 billion to budget deficits over the 2010–2019 period.”

The deficits would grow down the road: “The agency estimates that the two bills together would cost about $32 billion more in 2019 than HR 3962 alone and that the combination of the two bills would increase the budget deficit in 2019 by $23 billion relative to current law,” CBO wrote. “Those increments would grow during the following decade.”

But today, CBO came back with a revision of its November 6 estimate of HR 3962, which had concluded that that bill, by itself, would result in a $109 billion deficit reduction over the 2010-2019 period. Now, according to the new estimate, CBO believes “the legislation would yield a net reduction in deficits of $138 billion over the 10-year period, correcting a mistake that CBO made in its earlier assessment of the impact of section 2581 of the legislation, which would establish the Community Living Assistance Services and Supports (CLASS) program.”

That would suggest that the budget impact of the two bills together would be $29 billion less severe over 10 years than stated in yesterday’s letter to Rep. Ryan, or $60 billion in deficits. More changes to come, undoubtedly.

Megan McArdle wrote earlier today for The Atlantic to explain why the two bills were likely to pass or fail together.

Last night, the Democratic majority in the Senate released the text of the Senate health care bill (pdf, 2.5mb), and Open Congress provided early coverage shortly after the bill’s release, including a comparison of Congressional Budget Office estimates of the House and Senate versions. Today, the folks at Open Congress were quick to post their version of the bill converted to HTML, and they followed up later with information about the bill’s online disclosure provisions.

On its Directors Blog, the CBO today posted a summary of its letter to Senate Majority Leader Harry Reid (D-NV), in which the CBO gave its initial estimate of the bill’s budgetary impact.

The Congressional Budget Office, working with the Joint Committee on Taxation (JCT), has run the numbers on HR 3962, the Affordable Health Care for America Act. While acknowledging “substantial uncertainty” in its projections of the bill’s budgetary impact, CBO said in its preliminary analysis that the bill would cost just under $900 billion over 10 years, reduce the federal budget deficit by $104 billion over that period, and raise the percentage of nonelderly legal residents with insurance coverage from 83 percent to 96 percent.

Excerpts from CBO’s blog post:

“According to CBO and JCT’s assessment, enacting H.R. 3962 would result in a net reduction in federal budget deficits of $104 billion over the 2010–2019 period…

The estimate includes a projected net cost of $894 billion over 10 years for the proposed expansions in insurance coverage…

Over the 2010–2019 period, the net cost of the coverage expansions would be more than offset by the combination of other spending changes, which CBO estimates would save $426 billion, and receipts resulting from the income tax surcharge on high-income individuals and other provisions, which JCT and CBO estimate would increase federal revenues by $572 billion over that period.

By 2019, CBO and JCT estimate, the number of nonelderly people who are uninsured would be reduced by about 36 million, leaving about 18 million nonelderly residents uninsured (about one-third of whom would be unauthorized immigrants). Under H.R. 3962, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 96 percent.”

CBO said it expected the bill would continue to reduce budget deficits “slightly” over the second decade after enactment, but cautioned that those long-term projections “assume that the provisions of HR 3962 are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the ‘sustainable growth rate’ mechanism governing Medicare’s payments to physicians has frequently been modified to avoid reductions in those payments, and legislation to do so again is currently under consideration in the Congress.”

Household incomes fell, the number of people without health insurance rose, and about 2.5 million more Americans fell below the poverty line in 2008, according to newly published data. The findings, reported in the Census Bureau’s annual publication, Income, Poverty, and Health Insurance Coverage in the United States, reflected damage done in 2008 by the recession, measured to have begun in December 2007. A year earlier, the same series reported higher incomes and a decline in the number of uninsured in 2007.

The poverty rate rose from 12.5 percent in 2007 to 13.2 percent in 2008, “the first statistically significant annual increase since 2004” and the highest level reached since 1997, the Census Bureau said.

While the number of people without health insurance coverage rose from 45.7 million in 2007 to 46.3 million in 2008, the number of people with health insurance also increased, from 253.4 million in 2007 to 255.1 million in 2008; overall the percentage without health insurance remained nearly unchanged at 15.4 percent.

The full report (pdf, 3.0mb) is available on the Census Bureau website; data for 2003 to 2006 are made available online by the Government Printing Office.

Changes to Medicare Part D proposed in the Tri-Committee health care bill, HR 3200, America’s Affordable Health Choices Act of 2009, “would collectively save the federal government about $30 billion over the 2010–2019 period” while having a varying impact on beneficiaries depending on the amount of drugs they purchased, according to a new estimate by the Congressional Budget Office. CBO Director Douglas Elmendorf relayed the findings in a letter to Rep. Dave Camp (R-MI), Ranking Member on the House Ways and Means Committee.

Elmendorf summarized the changes the bill would make to prescription drug benefits under Medicare Part D, including the elimination by 2022 of the so-called “doughnut hole” – the gap in coverage between the expiration of an initial coverage range in which the beneficiary pays 25 percent of the cost of covered drugs, and the onset of a “catastrophic threshold” above which the beneficiary pays about 5 percent of the cost.

The result for beneficiaries would be higher premiums, but “greater protection against incurring high drug costs” because their share of the purchase price of their prescriptions would fall. Beneficiaries’ total prescription drug spending would be lower “on average,” but would vary among beneficiaries, Elmendorf wrote:

“Those who ended up purchasing a relatively small amount of drugs in a year would pay more in additional premiums than they would gain from lower cost sharing, while those who purchased a relatively large amount of drugs in a year would gain more from lower cost sharing than they would pay in higher premiums. CBO has not estimated the number of beneficiaries who would fall into each of those groups.”

Three recent reports by the Congressional Research Service set out the issues Congress is tackling as it works to craft health care reform legislation.

Health Care Reform: An Introduction
The July 29 revision of this report identified and discussed the three predominant concerns driving interest in health care reform – coverage, costs, and quality – and provided an overview of legislative issues likely to arise in any reform efforts.

Employment-Based Health Coverage and Health Reform: Selected Legal Considerations
This report looked at the legal questions posed by the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. The report said ERISA could be an important part of the health care reform debate if a bill were to place new benefit requirements on employers, or if Congress were to amend the role of states in regulating employment-based benefits.

The tax code could be implicated, CRS said, because “employer-provided health insurance is generally not subject to income or payroll taxes. This effectively results in the subsidization of employer-provided health insurance by the federal government. Some have argued that this subsidization is partly responsible for increasing costs of health insurance, as it gives participants an inaccurate sense of the true cost of their health care and leads to increased utilization of health care resources. Therefore, some have proposed reducing or eliminating this exclusion in order to provide individuals with a more accurate economic picture of their health care choices, while simultaneously raising federal revenue to pay for other aspects of health care reform.”

Private Health Insurance Provisions of H.R. 3200
This report summarized the so-called Tri-Committee bill approved by the House Ways and Means, Energy and Commerce, and Education and Labor Committees.

The Georgetown University Health Policy Institute’s Center for Children and Families has prepared a side-by-side comparison (pdf, 198kb) of the House bill and the one passed by the Senate Health Education Labor and Pensions (HELP) Committee (pdf, 143kb). A separate Senate bill has yet to be reported from the Senate Finance Committee.

The Congressional Budget Office has provided several analyses of the health care reform options currently being considered by Congress. Most recently, in a July 25 letter (pdf, 504kb) to House Majority Leader Steny Hoyer (D-MD), CBO said a five-member Independent Medicare Advisory Council, as proposed by the Obama administration in an Independent Medicare Advisory Council Act (pdf, 78kb), “would yield savings of $2 billion over the 2010–2019 period (with all of the savings realized in fiscal years 2016 through 2019) if the proposal was added to HR 3200, the America’s Affordable Health Choices Act of 2009, as introduced in the House of Representatives.”

In that letter, CBO asserted that “the available evidence implies that a substantial share of spending on health care contributes little, if anything, to the overall health of the nation. Therefore, experts generally agree that changes in government policy have the potential to significantly reduce health care spending – for the nation as a whole and for the federal government in particular – without harming people’s health. However, achieving large reductions in projected spending would require fundamental changes in the financing and delivery of health care.”

The $2 billion in projected savings would offset only a fraction of the cost of HR 3200 CBO estimated a week earlier, when it released a preliminary analysis of the bill projecting that by 2019, the bill’s insurance coverage provisions “would add $202 billion to the federal deficit… That increase would be partially offset by net cost savings of $50 billion and additional revenues of $86 billion, resulting in a net increase in the deficit of an estimated $65 billion.”

CBO Director Douglas Elmendorf was in the news for comments he made before the Senate Budget Committee on July 16, during testimony on the long-term budget outlook. Responding to a question from committee chairman Kent Conrad (D-ND) about the health care proposals before Congress, Elmendorf said: “In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount, and on the contrary, the legislation significantly expands the federal responsibility for health care costs.” (See the webcast – the Q&A begins at about 35:30.)

Responding to follow-up questioning from Conrad, Elmendorf continued:

“As we wrote in our letter to you and to Senator Gregg, the creation of a new subsidy for health insurance, which is a critical part of expanding health insurance coverage, in our judgment, would by itself increase the federal responsibility for health care. That raises federal spending on health care, it raises the amount of activity that is growing at this unsustainable rate. And to offset that, there would have to be very substantial reductions in other parts of the federal commitment to health care, either on the tax revenue side, through changes in the tax exclusion, or on the spending side, through reforms in Medicare and Medicaid. Certainly reforms of that sort are included in some of the packages, and we are still analyzing the reforms in the House package – the legislation was only released, as you know, about two days ago – but the changes that we have looked at so far do not represent the sort of fundamental change on the order of magnitude necessary to offset the direct increase in federal health costs from the insurance coverage proposals.”

You can follow CBO’s frequent updates in the “Health” sections of its website and blog.

In the newest update of its analysis of the President’s budget, the Congressional Budget Office estimated that under President Obama’s policies, “the deficit in 2009 would total $1.8 trillion and equal 13.0 percent of gross domestic product (GDP)… In 2010, the deficit would measure 9.9 percent of GDP, or $1.4 trillion, CBO estimates. The cumulative deficit over the 2010–2019 period would equal $9.1 trillion (5.2 percent of GDP), more than double the cumulative deficit projected under the current-law assumptions embodied in CBO’s March baseline. As a result, debt held by the public would rise from 57 percent of GDP in 2009 to 82 percent of GDP by 2019.”

Separately, CBO issued an assessment of current health care reform proposals which concluded that without substantial reforms in health care delivery, “the significant costs of many current proposals to expand federal subsidies for health insurance would be much more likely to worsen the long-run budget outlook than to improve it.”

Social Security and Medicare remain on an unsustainable and deteriorating financial course, according to the annual reports of the programs’ trust fund trustees. The trustees’ summary (pdf, 95kb) said Social Security’s reserves will be exhausted by 2037 – four years earlier than projected a year ago – and that one of the two components of Medicare, its Hospital Insurance (HI) Trust Fund, will exhaust its reserves in 2017, two years earlier than projected last year.

“Medicare’s financial difficulties come sooner—and are much more severe—than those confronting Social Security. While both programs face demographic challenges, rapidly growing health care costs also affect Medicare … [W]hile Medicare’s annual costs were 3.2 percent of Gross Domestic Product (GDP) in 2008, or about three quarters of Social Security’s, they are projected to surpass Social Security expenditures in 2028 and reach 11.4 percent of GDP in 2083.”

The summary concluded that the “financial difficulties facing Social Security and Medicare pose serious challenges. For Social Security, the reform options are relatively well understood but the choices are difficult. Medicare is a bigger challenge. Its cost growth can be contained without sacrificing quality of care only if health care cost growth more generally is contained.”

Full reports:
Social Security (pdf, 1.0mb)
Medicare (pdf, 3.2mb)

Previous editions of the Social Security Trustees reports are provided by the Social Security Administration, and several years of Medicare Trustees reports are provided along with background information by the Centers for Medicare and Medicaid Services.

Household income edged upward 1.3 percent in 2007, while the number of Americans without health insurance fell by 1.3 million and the poverty rate remained roughly steady, according to the Census Bureau. The figures were compiled in the 2008 Current Population Survey (CPS) and reported in the latest edition of Income, poverty, and health insurance coverage in the United States (pdf, 2.9mb).

Along with data from the CPS, which provides national-level data, the Census Bureau also published data from the American Community Survey (ACS) which compiles statistics at the state and local levels. Data from the ACS were published in Income, earnings, and poverty data from the 2007 American Community Survey (pdf, 1.9mb).

Along with the two reports, the Census Bureau posted a press release summarizing the findings of each survey.