CBO: Health care bill to cost $829 billion

updated 6:32 p.m. ET Oct. 7, 2009

WASHINGTON - Health care legislation drafted by a key Senate committee would expand coverage to 94 percent of all eligible Americans at a 10-year cost of $829 billion, congressional budget experts said Wednesday, a preliminary estimate likely to power the measure past a major hurdle within days.

The Congressional Budget Office added that the measure would reduce federal deficits by $81 billion over a decade and probably lead to "continued reductions in federal budget deficits" in the years beyond.

The report paves the way for the Senate Finance Committee to vote as early as Friday on the legislation, which is largely in line with President Barack Obama's call for the most sweeping overhaul of the nation's health care system in a half-century.

At the White House, spokesman Reid Cherlin said the analysis "confirms that we can provide stability and security for Americans with insurance and affordable options for uninsured Americans without adding a dime to the deficit and saving money over the long term."

Sen. Max Baucus, D-Mont., the committee chairman and principal architect of the measure, hailed the estimates within moments of receiving them.

"This legislation, I believe, is a smart investment on our federal balance sheet. It's an even smarter investment for American families, businesses and our economy," he said on the Senate floor.

Middle of the road
The committee Baucus chairs is the fifth and last of the congressional panels to debate health care. The Senate Finance version has a decided middle-of-the-road flavor, shunning any provision for the government to sell insurance in competition with private industry. That provision, strongly favored by many Democrats and just as strongly opposed by Republicans, is still alive in proposed House versions of the legislation.

The Finance Committee bill does not require businesses to offer coverage to their workers, either, although large firms that do not would be required to offset the cost of any government subsidies going to those employees.

While generally positive about the legislation's effects, the report contained important caveats.

One noted that the estimate does not include the costs of proposed payment increases for doctors serving Medicare patients, roughly $200 billion through 2019. Additionally, a so-called fail-safe mechanism to hold spending in line could result in cuts as large as 15 percent in federal subsidies designed to help the poor afford insurance, CBO said.

Beginning in 2013, the measure would require that millions of Americans purchase private insurance for the first time, and would set up a new marketplace where policies would be available. Failure to obey the requirement would result in penalties of up to $750 per family.

Video   CBO: Health reform could reduce deficit Oct. 7: The Congressional Budget Office estimates the cost of the Senate Finance Committee's health care reform plan at $829 billion over 10 years, lower than analysts had expected. Nightly News

Federal subsidies would be available to millions of lower-income individuals and families to help defray the cost of coverage that would otherwise be out of their reach. The alternative to government-sold health care, a proposal for nonprofit co-ops that would compete with private companies, was judged largely ineffective by budget officials. Such arrangements "seem unlikely to establish a significant medical presence in many areas of the country," they wrote.

The legislation also would ban current insurance industry practices that deny coverage on the basis of pre-existing medical conditions, and restrict companies' ability to charge vastly higher premiums on the basis of age, gender or other factors.

Compromise legislation
The measure would be paid for through a variety of tax increases and spending cuts, including savings of hundreds of billions of dollars from Medicare, the federal health care program for seniors.

Democratic leaders in both houses are hoping to hold votes on health care on the floor of the House and Senate within a few weeks.

Anticipating approval by the Finance Committee this week, Majority Leader Harry Reid is already overseeing efforts to merge that bill with an alternative approved by the Senate Committee on Health, Education, Labor and Pensions.

Reid is subject to intense cross-pressures, not only from the members of the two committees, but also from the Obama administration and rank-and-file senators seeking to mold the legislation to their liking.

Reid also must take into account the likely need to amass 60 votes behind any legislation., the majority needed to overcome any Republican filibuster.

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