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CBO: Health Overhaul Cost Expected to Reduce Deficit by $130B

Source: WSJ

Posted on 18 Mar 2010

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The latest version of the Democrats' health overhaul will cost $940 billion over a decade and expand insurance coverage to 32 million Americans, according to a Congressional Budget Office report cited Thursday by Democratic aides.

The formal release of the final details of the overhaul plan and the CBO analysis were expected later Thursday. That will pave the way for a climactic vote as soon as Sunday on President Barack Obama's top domestic priority. It sets up a tight time line since the president plans to depart for an overseas trip that day, and House leaders want him on hand to win votes in the final hours.

The CBO report also states that the bill will reduce the deficit by $130 billion in the first 10 years of the legislation and an additional $1.2 trillion in the second 10 years.

The cost estimate gives Democrats a critical piece they need to win over wavering lawmakers on the bill. Many had said they were waiting for the CBO analysis before making up their minds.

"It took some time, but we're very pleased with our $1.2 trillion in savings," House Speaker Nancy Pelosi said. "It's even more savings than the Senate bill."

The White House had originally estimated the package would cost $950 billion over a decade. The health-overhaul bill passed by the Senate on Dec. 24 carried a 10-year price tag of $871 billion, while the House's version passed Nov. 7 was pegged at $1.055 trillion over a decade.

Republicans reiterated their criticism of the legislation Thursday and called on wavering Democrats to vote no.

"Every time a new iteration of the Democrats' health-care bill is unveiled, the price tag goes up," said Senate Republican Whip Jon Kyl of Arizona. "The only thing that remains the same is that the American taxpayer will be on the hook to pay for it."

The legislation would reduce the annual growth in Medicare expenditures by 1.4 percentage points per year and begin to close a gap in seniors' prescription drug coverage known as the donut hole. Through cuts in payments to Medicare providers, the bill is expected to extend the solvency of the Medicare insurance program by at least nine years.

The final package is made up of the Senate version of the health overhaul and an additional bill containing changes aimed at winning over House Democrats.

As of early Thursday, House leaders were still about 10 votes short of the 216 they need to pass the legislation. Fiscally conservatives Democrats plan to study the package before announcing whether they'll support the legislation, and their votes will be critical in determining the outcome.

After appearing in peril just weeks ago, Thursday's developments showed how the health overhaul has gained significant momentum in recent days. Democratic leaders and the White House plan to put heavy pressure on wavering members over the weekend in a bid for the remaining votes.

The legislation calls for the most significant changes to the health system since the government created the Medicare program for the elderly more than four decades ago. The bill would create a near-universal system of health insurance by giving tax credits to lower earners to offset the cost of buying insurance and expanding the Medicaid federal-state insurance program for the poor.

It would prevent insurers from denying coverage to people because they have a pre-existing health condition and revoking their policies if they became ill. In exchange, nearly all Americans would be required to carry insurance or pay a fine.

Small businesses would get tax credits to help them provide coverage, and large employers would pay a penalty if they didn't provide affordable coverage and their workers obtained a government insurance subsidy.

It wasn't clear whether some of the newest changes sought by the White House will remain in the legislation. The White House is seeking a new federal rate board to regulate insurance premiums. Some Democrats have questioned whether the board would pass muster with the Senate parliamentarian, who must vet the package of changes to make sure they're all related to the federal budget.

With the bill in its final stretch, interest groups were engaged in a last-minute push to shape the outcome. Businesses groups were targeting on-the-fence Democrats and asking them to vote no on the grounds that the bill will raise taxes and doesn't go far enough to reduce the growth of health costs. Drug makers and hospitals were preparing to line up in support of the final package, with pharmaceutical companies planning to spend heavily on advertising thanking Democrats who vote in favor. But they were waiting to see the final bill before pulling the trigger.