US Budget Watch Blog

Interactive and Sharable Graphs Comparing the Health Care Bills

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

Today, US BudgetWatch updated its Charts Comparing Health Care Reform Bills. The publication compares the House and Senate health care bills through two text charts and four graphs, all exploring different metrics.

Here at The Bottom Line, we have republished the graphs in a way that makes them both interactive and sharable. That means you can explore the charts here, or feauture them on your own website or blog.

As the bills change, we'll update these graphs -- and whatever you have embedded will automatically update with them.

To embed one of the charts into a blog or website, simply click the "Share this chart" link at the bottom left corner of the chart, and then copy the embed code. We only ask that you attribute The Bottom Line or the Committee for a Responsible Federal Budget.

Please feel free to contact us with any questions, and we will respond ASAP. Also check out all the charts, along with their notes and source information, here.

Deficit and Debt Make Headlines

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

Public concern over the United States’ ballooning deficit and debt seems to be growing. Both the cover of this week’s Economist and the lead story on The New York Times website tackle U.S. borrowing. As of this afternoon, The Times story was one of the site’s most emailed.

As The Times explains, the timing of increased government borrowing poses additional challenges:

The problem, many analysts say, is that record government deficits have arrived just as the long-feared explosion begins in spending on benefits under Medicare and Social Security. The nation’s oldest baby boomers are approaching 65, setting off what experts have warned for years will be a fiscal nightmare for the government.

The Economist makes the same argument CRFB President Maya MacGuineas made when testifying before Congress a couple weeks ago. Both argue the U.S. should announce a credible plan to reduce the deficit.

Far from requiring immediate spending cuts or tax increases, a credible plan would reassure markets and allow an orderly exit from fiscal stimulus.

To reduce the debt, The Economist outlines a number of spending cuts and tax increases.

Raising the retirement age for Social Security and Medicare would save money while encouraging Americans to work longer, thereby expanding economic potential. Medicaid could be converted to block grants, compelling states to assume more of the burden of cost control. Other spending should also be vigorously squeezed, to stop federal funds being wasted on highways of dubious value or trade-distorting farm subsidies.

Also a sign that deficit reduction is gaining support, reports indicate that the White House plans to focus on the debt in the state of the union address.

And, another most-read story over at The Wall Street Journal is former CBO director and CRFB board member Douglas Holtz-Eakin’s editorial on “The Coming Deficit Disaster.” He argues that now is the time to deal with the deficit.

Weekend Editorial Roundup

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

Here are the highlights from this weekend’s editorials on fiscal and budget policy:

As politicians react to record high levels of unemployment, The Washington Post criticizes lawmakers for grandstanding. With record a budget deficit and interest rates at zero, The Post says, “the limits of prudent government intervention are already being tested,” and politicians should think carefully before enacting new costly stimulus spending.
The Wall Street Journal denounces the debate over the health care reform bill as a political charade. Moderates will “protest and posture” until the bill is improved, even though the bill is so flawed that politicians should scrap it and start over, The Journal argues.
The New York Times praises the Senate health care reform bill for including provisions that would reduce cost. The legislation is an improvement over the Senate Finance Committee bill and conservative Democrats should support the Senate bill, The Times says.

To sign up to receive a daily roundup of news clips on fiscal and budgetary matters, please contact lewisb@newamerica.net.

One More FDIC Bank Closing

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

On Friday evening, the FDIC reported that it has taken over an additional bank (Commerce Bank of Southwest Florida) for a cost to the FDIC of around $24 million. This brings the total number of failed banks in 2009 to 124. Total deposits of all failed banks now equal $115.5 billion for 2009 and over $349 billion since the beginning of 2008, all at an estimated cost to the FDIC of just under $54 billion. Visit Stimulus.org for more details and a full list of FDIC bank closings.

Total Deposits
Cost to the FDIC

Commerce Bank of Southwest Florida
$76,700,000
$23,600,000

China Worries About U.S. Debt -- SNL Style

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

Yesterday, Saturday Night Live's opening sketch featured Chinese President Hu Jintao (played by Bill Hader) in a joint press conference with President Obama (played by Fred Armisen). President Jintao expressed deep concern over their holdings of U.S. debt, although President Obama reassured them they "are going to get [their] money back". Watch the sketch here:

Senate Votes to Begin Health Care Debate

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

Yesterday, the Senate voted 60-39 to begin debating their health care reform bill (all 60 votes were needed for debate to continue). CRFB has put together a chart comparing the House and Senate bills here. We also recommend you check out the following CBO and JCT reports on the Senate bill released in the last few days:

CBO Analysis of Patient Protection and Affordable Care Act
JCT Revenue Estimates for Patient Protection And Affordable Care Act
CBO: Subsidies and payments at different income levels
CBO: Distribution of individual mandate penalties
CBO: Effect on the Hospital Insurance (HI) trust fund
CBO: Effect on projected enrollment in Medicare Advantage plans and subsidies for extra benefits not covered by Medicare

And check our our recent blogs on the bill:

Reports Roundup

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

A number of very interesting and relevant government reports have come out this week. Check them out:

The True Costs of Health Reform

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

Yesterday, the House passed legislation permanently updating physician payments on a deficit-financed basis (against our urging). Although passed separately from their health care bill, it is worth looking comprehensively at the cost of health care reform, as passed by the House of Representatives so far.

As we show in our newly updated health care comparison chart, the "Affordable Health Care for America Act," which passed the House recently, it would reduce the ten year deficit by around $109 billion.

That number, though, includes $72 billion worth of savings from the CLASS Act* -- a long-term care insurance plan which raises early revenues due to a five year vesting period, but spends all of that money down in the out years. If the effects of the CLASS Act are excluded, as most experts think they should be, the bill will reduce the deficit by $37 billion over ten years. House leaders deserve credit for rightfully describing the bill this way (unlike the Senate leadership, which includes the savings from the CLASS Act in their deficit reduction claims).

But wait, there is more. The House, yesterday, passed a bill which would eliminate the so-called "sustainable growth rate" (SGR) for Medicare physician payments and replace it with a new formula. Under the existing formula, physicians are scheduled to receive a 21 percent pay cut next year, and further cuts thereafter. On its own, reforming the SGR would cost $210 billion over the next decade. CBO has estimated that, if enacted with the comprehensive reform bill, fixing the SGR would cost closer to $198 billion.

$109 billion - $72 billion - $198 billion = -$161 billion. So instead of reducing the deficit by $109 billion, it will be as if the House is increasing the deficit by $161 billion.

And the long-term picture looks even worse. Under the official deficit measure of the Affordable Health Care for America Act, the CBO estimates a $9 billion deficit reduction in 2019; and because savings will grow slightly faster than costs, deficit reduction between 0% and 0.25% of GDP in the second decade. Using our measure, the 2019 deficit would be increased by $30 billion. And the costs of the SGR fix would also grow quickly, wiping out future savings. As you can see in the graph above, the deficit impact between 2018 and 2019 is roughly flat (and negative). CBO estimates that if the SGR fix were combined with the other bill, deficits would increase by between 0% and .25% in the second decade.

*A couple billion of that savings would come from lower Medicaid costs. This is a fair and legitimate offset, and should technically be included in the final deficit number. Due to technical limitations, however, we have had to group these savings with the rest of the CLASS Act.

So what about the Senate? Like the House, their bill -- which technically would reduce the deficit by $130 billion -- includes offsets from the CLASS Act (which they count!). Once that is excluded, the actual deficit reduction would be more like $57 billion.

On the SGR fix, the Senate hasn't passed anything yet. In fact, they rejected a previous deficit-financed fix, and their reform legislation includes a temporary ($11 billion) patch of the SGR, which they pay for.

But if the Senate did pass a permanent fix the SGR similar to the House's, it would cost around $185 billion. That would mean that if the Senate deficit-finances the remainder of an SGR fix, and they pass health reform legislation in its current form, they'd be adding around $130 billion to the deficit, rather than reducing the deficit by that amount. It's important to note, though, that the Senate has not passed an SGR fix on a deficit-financed basis.

In a similar type of analysis, Senate Budget Committee Republicans have attempted to estimate the "true cost of the Senate health care bill." Their concern is chiefly in spending rather than deficit impact, and focuses strongly on timing aspects -- aiming to measure the bill's costs once it is fully phased in.

They find that if measuring all the costs of the bill for the first ten years after the major provisions begin (2014 through 2023), it would cost around $2.5 trillion. This is significantly higher than the $848 billion normally advertised as the cost of the coverage between 2010 and 2019, the roughly $940 billion we calculate as the gross cost, or even the $1.24 trillion they estimate for 2010 to 2019. It is important to note that, in calculating gross costs, this analysis pulls apart a number of line items which are generally netted out -- for example premiums and spending for the "public plan" are counted separately.

In that same period, they calculate offsets of around $2.7 trillion. See their estimates here:

Blue Dog Coalition Endorses SAFE Commission Act

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

The Democratic Blue Dog Coalition, a group comprised of fiscally conservative members of the House, officially endorsed the Securing America’s Future Economy (SAFE) Commission Act (H.R. 1557). The bill, introduced by Representatives Frank Wolf (R-VA) and Jim Cooper (D-TN), would establish a fiscal reform commission to develop legislation to address the country’s unsustainable imbalance between long-term spending commitments and projected revenues.

The SAFE Commission would create a 16-member panel, including the Treasury Secretary, OMB Director, four members appointed by the Senate Majority Leader, four by the Speaker of the House, three by the Senate Minority Leader, and three by the House Minority Leader (with no more than a total of four Members of Congress on the commission).

On Nov. 10, Maya MacGuineas, President of the Committee for a Responsible Federal Budget, testified before the Senate Budget Committee on bipartisan process proposals for long-term fiscal stability. She argued that while a commission could be first step and not a final resolution of the country’s serious fiscal situation, a commission could be extremely helpful in focusing on a single fiscal goal, in providing a forum for working out the details, and in signaling to our creditors that we are serious about bringing down the debt.

Senate Introduces New Health Care Bill

USBudgetWatch.org — Thu, 01 Jan 1970 00:00:00 -0500

Yesterday Majority Leader Harry Reid introduced the Patient Protection and Affordable Care Act. The bill reduces the deficit by $130 billion over ten years, and spends $848 billion in coverage expansion.

We have broken down the costs and savings of the bill, compared to other versions, below.

The bill spends a bit more than the Senate Finance Committee bill last month, but significantly less than the planned costs of the Senate HELP Committee bill. On tax policy, the new bill reduces the excise tax on high cost plans, relative to the Finance bill, so that it raises around $50 billion less than it did in the Finance Committee version. This revenue loss is replaced with an increase on the Medicare payroll tax for high earners.

See our updated chart comparing the HELP Committee bill, the Senate Finance Committee bill, and the Patient Protection and Affordable Care Act below. Click here for our comparison of the new Senate bill with the most recent House bill.

Provisions
HELP Committee
Finance Committee
Senate Leadership

Individual Penalties
$36
$4
$8

Employer Payments
$52
$23
$28

Mandate Provisions
$88

$27
$36

Exchange Subsidies
($723)
($461)
($447)

Medicaid Expansion
X / ($500)*
($345)
($374)

Small Business Credits
($56)
($23)
($27)

Coverage Expansion
($779) / ($1279)*
($829)
($848)

Physician Payment Updates
n/a
($11)
($11)

Medicare Prescription Drug Coverage
n/a
($21)
($23)

Measures to Slow Health Care Cost Growth
($24)
($14)
($17)

Other Spending Changes
($26)
($42)

Other Spending
($24)

($72)
($93)

Prescription Drug Cost Reductions
X
$28
$51

Medicare Advantage Cuts
X
$114
$119

Reductions in Provider Payment Updates
X
$163
$160

Medicare Premium Increase
X
$33
$36

Medicare Payment Commission
X
$22
$23

Measures to Slow Overall Health Care Cost Growth
X
$29
$26

Measures to Reduce Federal Health Care Spending
X
$135
$129

Spending Offsets
X
$524
$544

Excise Tax on High Cost Insurance
X
$201
$149

Tax Gap and Loopholes Closing
X
$17
$17

Limits to Health Care Tax Benefits
X
$42
$43

Fees on Health Care Companies and Taxes on Certain Heath Procedures
X
$121
$108

Medicare Payroll Tax Increase for High Earners
X
n/a
$54

Tax Increases
X
$382
$370

Interactions and Other Spending and Taxes

$46
$49
$48

Budgetary Impact Subtotal
($669) / ($1169)*
$81
$57

CLASS Act+
$58

n/a
$72

Total Budgetary Impact
($611) / ($1111)*
$81
$130

Tenth Year Budgetary Impact

($120)
$12
$8

Deficit Reduction in Second Decade
unknown
0.25% to 0.5% of GDP
0.25% of GDP

Reduction in Uninsured
21 million / 38 million*
29 million

31 million

Numbers in billions, with positive numbers representing a reduction in the deficit
Sources: Congressional Budget Office, Joint Committee on Taxation, and Authors' Calculations
X = Not included within bill due to jurisdictional issues
*The HELP Committee bill includes no Medicaid expansion, due to jurisdictional issues. However, they have expressed their intent to do so, and CBO has provided a very rough estimate as to how much that would cost.
+The CLASS Act makes available government-sponsored long-term care insurance. Because this insurance would have a "vesting period," the provision appears to raise considerable amounts of revenue over the next decade. However, these revenues must ultimately be used to cover the program's costs, and therefore do nt belong in the bill as an offset.