CBO: Healthcare bill exceeds $1 trillion

The Congressional Budget Office (CBO) released a report late Monday estimating the cost of a leading healthcare reform proposal at more than $1 trillion, but that figure looked only at a portion of the bill.

The analysis falls just within the most expensive cost scenario sketched out by Democratic leaders in recent days, but does not include an estimate for a highly contentious government-run insurance plan that would compete with private insurers.

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Senate Republicans are sure to use the data as ammunition to oppose expensive Democratic plans to subsidize healthcare for low-income families, as well as what is not included in the estimate.

The CBO report raises doubt as to whether Democrats will be able to keep the cost of healthcare reform under $1 trillion, as leaders have predicted.

The analysis estimated the net impact of a bill sponsored by Sen. Edward Kennedy (D-Mass.) at $1.04 trillion over the decade spanning 2010 to 2019.

But CBO officials warned the cost of the Democratic plan would likely increase if lawmakers expanded the eligibility of Medicaid or otherwise subsidized health insurance for people earning below 150 percent of the federal poverty level, or $22,000 for a family of four.

Henry Aaron, a senior fellow at the Brookings Institution, said the estimated expense will make it that much tougher for Democrats to pass.

“I think they’re setting themselves up for a hellacious summer of negotiations,” Aaron said in an interview shortly before CBO released its report. “They’re trying to find ways to pay for a bill that makes a major dent in the ranks of the uninsured [and that] is going to require some combination of tax increases and spending cuts — nearly all of which are political mine fields.”

A CBO official emphasized that the report is not a final score or tally of the cost of legislation advanced by Sens. Kennedy and Chris Dodd (Conn.), the senior Democrats on the Senate Health, Education, Labor and Pensions (HELP) Committee.

Sen. Charles Schumer (N.Y.), vice chairman of the Democratic Conference and a member of the Senate Finance Committee, told reporters last week that healthcare reform would cost between $600 billion and $1 trillion.

And President Obama said in a speech Monday that “making healthcare affordable for all Americans will cost somewhere on the order of $1 trillion over the next 10 years.”

Senate Republicans argued on Monday that Democrats were hoping for a less- costly preliminary analysis from CBO.

“This is significantly higher than they expected,” said a GOP aide, who noted that CBO’s estimate reached the uppermost range set forth by Schumer last week.

“I think anytime you hear folks on the Hill make an approximate estimate that wide, they’re expecting to come in on the low end. They’re not expecting it to top out,” said the aide.

CBO’s estimate indicates that legislation introduced last week by the HELP Committee could exceed its preliminary estimate significantly.

“[B]ecause expanded eligibility for the Medicaid program may be added at a later date, those figures are not likely to represent the impact that more comprehensive proposals—which might include a significant expansion of Medicaid or other options for subsidizing coverage for those with income below 150 percent of the federal poverty level—would have both on the federal budget and on the extent of insurance coverage,” the report stated.

The CBO report focused on only one title of Kennedy’s bill, but that section, Title I, will account for the bulk of the legislation’s cost. Analysts disagree over the projected cost of implementing a public insurance plan. Liberals argue that such an option would reduce the overall cost of reform by bringing down insurance premiums.

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The estimate, however, is less than the price tag some liberal policy experts had initially affixed to reform.

One liberal policy expert pegged the cost at between $1.25 trillion and $1.5 trillion over the next 10 years.

The 10-year cost of reform could approach $2 trillion if the projections are made from the date that proposals are fully implemented. While the projected cost for a new system may reach $1.5 trillion for 2010-2019, it could run significantly higher for 2013-2022, as healthcare costs rise steadily each year.

Aaron, of the Brookings Institution, questioned whether Schumer’s estimate of $600 billion to $1 trillion could buy the policy reforms Kennedy drafted.

The CBO’s analysis sets the stage for an intense debate among members of the Senate Finance Committee, headed by Sen. Max Baucus (D-Mont.), who now must draft legislation to pay for Kennedy’s plan.

Baucus is scheduled to release a draft bill at the middle of the week and a final bill on Friday.

“One of the things that has held things up a little bit is [the need] to get the CBO estimates,” Schumer said last week.

Jeffrey Young contributed to this article.