Cost of House Overhaul Plans Estimated at Around $900 Billion

Early cost estimates from the Congressional Budget Office find that the House's health care reform bills are close to President Obama's target of $900 billion, and some representatives are saying that the estimates support arguments for the inclusion of a "robust" public health insurance option in final legislation, The Hill reports (Soraghan, The Hill, 10/17).

In an effort to reduce the cost of the chamber's health reform bill (HR 3200) from $1.2 trillion, House Speaker Nancy Pelosi (D-Calif.) asked CBO to score competing versions of the legislation.

The report, which was given to House leaders last week, found that the plan favored by House liberals would cost an estimated $905 billion and that the plan favored by moderates would cost about $859 billion (Montgomery, Washington Post, 10/17).

Details of the Proposals

Both plans would create a public option, but the more liberal version would reimburse physicians at Medicare rates plus 5%, while the centrist version would require the HHS secretary to negotiate rates directly with providers (Hunt, CongressDaily, 10/16).

The "Medicare-plus-5%" plan is unpopular among rural lawmakers, primarily because they say Medicare already shortchanges providers in their districts. They prefer the "negotiated rate" plan, which would enroll some people in Medicaid rather than a public plan or give them subsidies to purchase private coverage in the individual market (The Hill, 10/17).

Under the original House bill, the federal government would incur all the costs for a Medicaid expansion, but the House Energy and Commerce Committee changed that provision to require states to cover 10% of the costs. It is unclear which formula House leaders are using in writing the final legislation (CongressDaily, 10/16).

Despite the more centrist version's lower cost, an aide to a member of the Congressional Progressive Caucus said, "The $905 billion plan is far superior," adding, "Individuals pay less, and it covers half a million more people."

Progressive Caucus leaders say that 200 House members support the "Medicare-plus-5%" proposal -- 18 votes shy of the 218 votes needed for passage (The Hill, 10/17).

Both proposals rely on the House's original framework, which would expand coverage by making more U.S. residents eligible for Medicaid and subsidizing the cost of private insurance coverage (California Healthline, 10/16).

However, to keep costs down, lawmakers reduced the subsidies and tax credits for businesses that provide coverage and target fewer people.

According to CBO, the new packages would extend coverage to 95% of U.S. residents by 2019, rather than 97% in the original legislation (Washington Post, 10/17).

Reaction From Democrats

Pelosi spokesperson Nadeam Elshami said that the cost estimates are "by no means final" and likely will change before they are publicly released. However, he said that the estimates "do confirm ... that the coverage provisions of the House bill will be under $900 billion and we will have a public option."

Rep. Anthony Weiner (D-N.Y.), a supporter of the more liberal plan, said that the CBO report "makes clear what we already knew -- a strong public option holds down costs by driving up competition and choice," adding, "I hope my deficit hawk colleagues take notice" (The Hill, 10/17).

Elshami said, "No final policy decisions have been made on how to proceed" (CongressDaily, 10/16).

House GOP Strategy Rallies Opposition to Legislation

In an attempt to stop a health care bill from proceeding in the House, Republican leaders are trying to get key interest groups to oppose the legislation.  Over the next three weeks, Republican leaders aim to highlight how the bills would negatively affect small businesses, senior citizens, women and children, the Washington Times reports.