The Wonk Room

NEW CBO SCORE: Package Would Reduce Deficit By $138 Billion, Cover 32 Million Americans

The Congressional Budget Office’s preliminary analysis of the reconciliation package, which aims to bridge the differences between the House and Senate health care bills, concludes that the legislation would cost $940 billion over 10 years, reduce the deficit by $138 billion over 10 years and by $1.2 trillion over 20 years. Significantly, the bill reduces annual growth in Medicare expenditures by 1.4 percentage points per year and extends Medicare solvency “by at least 9 years.” The bill also extends insurance to 32 million individuals, covering approximately 95% of the population over 10 years. Compared with previous House and Senate proposals, this package achieves the greatest deficit reductions and could play a significant role in swaying blue dog Democrats to support the bill by the time the House votes on Sunday:

Once the text of the final legislation becomes available, I will post a comparison table of the House and Senate bills, but for now it may be helpful to highlight the scope of this achievement. As the Council of Economic Advisers reported over the summer, “health care expenditures in the United States are currently about 18 percent of GDP, and this share is projected to rise sharply. If health care costs continue to grow at historical rates, the share of GDP devoted to health care in the United States is projected to reach 34 percent by 2040.” The number of uninsured will rise to 72 million in 2040 in the absence of reform. The amount of dollars spent in Medicare and Medicaid will also rise at an unsustainable rate.

This package covers 32 million Americans and, as the reduction in Medicare spending suggests, begins to slow the growth in health care spending. It reverses the current trend and lowers the deficit quite substantially over the next 20 years.

So this is something to keep in mind as Republicans ignore the deficit reductions in this score and blanked cable tv to argue that the bill is full of gimmicks (because spending starts before benefits) and the government is taking over. In fact, the reverse is true. The bill reduces the deficit over the full 20 years and slows government spending (in terms of Medicare).