A U.S. debt that is topping $12 trillion is raising fresh questions about the cost of President Barack Obama’s proposed healthcare overhaul, but those concerns are unlikely to sink the legislation.
The Congressional Budget Office, a nonpartisan scorekeeper of federal spending, put the first 10-year cost of the Senate healthcare bill at $849 billion and said it would reduce budget deficits by $130 billion over that period.
Republican critics of the overhaul, a top domestic priority for Obama, say those numbers reflect timing gimmicks that skew the bill’s costs and that the price tag will be closer to $2.5 trillion in the first decade the bill is fully implemented.
As the Senate prepares to begin debating the legislation next week when lawmakers return from a week-long Thanksgiving break, the White House is fighting back. In a conference call with reporters on Wednesday, senior officials said the legislation was fully paid for and that proposed cost savings would reap benefits far beyond official estimates.
“This thing at worst is deficit neutral,” said Nancy-Ann DeParle, who heads the White House health reform effort. “We believe the delivery system reforms and the other things that are done in this bill will have a bigger impact.”
Senator Judd Gregg, the top Republican on the Senate Budget Committee, argues that the cost estimates over the first decade are skewed because $486 billion in tax increases would start to take effect next year along with some Medicare cost cuts, but most of the new spending is delayed until 2014.
Also, the bill does not reflect the full 10-year cost of a proposed boost in Medicare payments to doctors. The Senate healthcare bill would stop a scheduled pay cut for next year but leave until later a vote on a permanent plan to improve doctors’ pay estimated to cost more than $200 billion.
“When all this new spending occurs, this bill will cost $2.5 trillion over that ten-year period,” Gregg said.
However, the CBO’s analysis finds that the revenue increases and the accumulation of cost savings — assuming they materialize — will far outweigh the new spending and would continue to reduce the federal deficit in future years.
With the Treasury Department reporting earlier in November that the U.S. debt topped $12 trillion, recent polling data show the public growing more anxious about the cost of the healthcare reform.
But those worries are not likely to sink the legislation, said Robert Bixby, executive director of the Concord Coalition, a nonpartisan advocacy group for fiscal responsibility.
The rosy CBO report should help the Democratic majority in Congress fend off deficit hawks, even though Bixby believes the legislation does too little to curb costs in the $2.5 trillion healthcare system, which makes up a sixth of the U.S. economy.
“One of the goals of healthcare reform at the beginning of the year was cost control because everybody concedes healthcare costs are on an unsustainable trend,” Bixby said in an interview. “The longer the process has gone on, the less this appears to be about cost control and the more it appears to be about expanding coverage.”
The Senate bill calls for about $491 billion in savings mostly from the Medicare health program for the elderly. Subsidies for Medicare Advantage, a program that uses private insurers to deliver Medicare services, would be cut. The bill also seeks to save Medicare money by cutting waste and by making changes to the payment system that reward quality of care rather than quantity of services.
Many analysts say the Senate bill does a better job at saving money than the more expensive version passed by the House of Representatives on November 7, but some are worried it does not go far enough to slow the future growth of healthcare costs.
Ralph Neas, who heads the centrist National Coalition on Health Care, calls the Senate bill a good first step. But he said much more was needed to contain soaring costs, not only in government health programs but in the private sector as well.
Such a move would make it easier to pass the bill in the 100-member Senate, where 60 votes are needed to advance major legislation, said Neas. It also would help shore up support among fiscally conservative Democrats in the House, he added.