The Wonk Room

What Do The New CBO Numbers Tell Us About Health Care Reform?

Yesterday, the Congressional Budget Office released a very preliminary cost estimate of the HELP Committee’s health care reform bill. The organization concluded that reform would cost “$1 trillion over the next decade and reduce the ranks of the uninsured by about one-third, or 16 million individuals”:

According to that assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010–2019 period. Once the proposal was fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million.

But as Ezra Klein and Jonathan Cohn observe, the estimate says very little about the actual cost of health care reform. Cohn:

Imagine you were trying to build your dream house and the architect gave you a status report. The design still wasn’t finished: He hadn’t sketched out the plumbing, the wiring, and the roof. But, he said, he could tell how much it would cost to build what he’d already designed. You’d be curious about the number; it might offer some hints about how much the house would cost in the end. But you wouldn’t spent too much time dwelling on it since, after all, the final price was going to be much different. Well, that’s the same attitude you should take about the estimates of the Senate Health, Education, Labor, and Pensions (HELP) Committee bill that the Congressional Budget Office (CBO) delivered yesterday.

Indeed, in an effort to reach a compromise with Republicans, the committee omitted language about the employer mandate or the new public health care plan. Medicaid expansion is outside of the HELP Committee’s jurisdiction (that’s up to Senate Finance) and the CBO incorrectly assumed that individuals would only pay a $100 fine if they remained uninsured. As a result, the organization concluded that reform would cost “$1 trillion over the next decade and reduce the ranks of the uninsured by about one-third, or 16 million individuals.”

The CBO scored a ‘draft of a draft’ proposal. As Paul Krugman concludes, “this was a failure of communication, partly the result of an attempt at bipartisan outreach, rather than a failure of policy.”