The House Health Bill Costs Almost $1.3 Trillion

As I’ve noted in a series of posts, there is often great confusion about the cost of the health bill being considered by Congress.

Yesterday, for example, many commentators were saying that the coverage expansions in the new House health bill would cost $894 billion over ten years, even though the actual cost is $1.055 trillion (according, as always, to the estimates of the Congressional Budget Office).

A second problem is confusion between (a) the cost of expanding coverage and (b) the overall cost of the bills. Expanding coverage is the key focus of each of the major health bills, but we should always keep in mind that the bills make other changes as well. In the case of the Baucus bill, for example, I estimated that other spending initiatives added about $75 billion, bringing its total cost to slightly more than $900 billion.

I’ve made the same calculations for the House health bill, and the additional spending is even larger: about $217 billion. Among many other things, that spending would increase payment rates for primary care physicians in Medicaid and create two new funds to finance public health investments and prevention and wellness efforts. The bill would also extend a provision in the recent stimulus bill (ARRA) that increased the federal share (the FMAP) of Medicaid spending, and thus provided assistance to the states:

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As noted, the House bill does not include any funding to prevent the upcoming 20%+ cut in payment rates for doctors in Medicare. The Baucus bill included a one-year fix at a cost of $11 billion, while the Senate’s efforts to pass a permanent fix without paying for it recently failed (thankfully).

P.S. Kudos to David Espo of the Associated Press for covering the cost of the House bill correctly. He wrote: “The Congressional Budget Office said the cost of additional coverage alone was slightly more [than] $1 trillion over a decade. But that omitted other items, including billions for disease prevention programs.”

Note on the numbers: The increases in other health spending programs are sprinkled throughout CBO’s analysis of the bill. I calculated the $217 billion figure by adding up all the individual line items that increased direct spending, with a couple of exceptions. First, I did not include the interaction effects that CBO lists as the end of the estimate because I was not sure how to allocate them; the interactions are large and could have a material effect on my estimate, potentially up or down. Second, there was one policy that led to both spending increases and spending decreases; since the decreases were larger, I didn’t include any of the increases in my figure. I am certainly open to other suggestions about how to add up the other spending in the bill.

18 thoughts on “The House Health Bill Costs Almost $1.3 Trillion”

  1. Who is going to pay the fine for the people who refuse to buy health care insurance. Are we going to let them die if they are brought into the hospital without insurance? Is death the penalty? Or going without the cast on a leg the penalty? And what is the deductable on this insurance? It is not like car insurance where there is a penalty if caught without a license and or insurance. The whole thing does not make sense to me. Does not give any incentive to those who choose not to take out insurance to do so.

    Plus, I do not believe that taxpayers should pay for abortions. ABORTIONS are not health issues. The same people would be getting abortions as if they were pills.

  2. Who to believe? Need to know party affiliation of article writer before believing it!
    Health Care costs LESS in countries that have healthcare coverage for ALL their citizens. Looks like Americans want to believe Insurance-bribed writers and not examine the facts—how have we gotten so selfish as to not look after our fellow Americans who have lost insurance with jobs due to this “recession,” or lost insurance due to being too ill?

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