Difference Between CBO, CMS Medicare Legislation Cost Estimates Examined
The Wall Street Journal on Tuesday examines how different cost estimates from the Congressional Budget Office and CMS on a provision to introduce private competition into Medicare could affect negotiations on a final Medicare bill. Both the House and Senate Medicare bills (HR 1 and S 1) passed earlier this year included a provision supported by the Bush administration that would allow Medicare to award contracts only to the three private health plans in each region that submitted the lowest bids, but conservative Republicans and health insurers opposed the three-company limit and won a tentative agreement from Medicare conferees to eliminate the provision in the final bill. CBO actuaries estimate that eliminating the provision would cost the federal government only about $200 million over 10 years because they assumed that few private health plans would submit bids and "tend to minimize the government's cost of helping plans establish themselves," the Journal reports. However, CMS actuaries, who predict that more private health plans would submit bids, estimate that the elimination of the provision would increase bids by 4% and cost between $40 billion and $60 billion over 10 years; they also assume a higher cost for premium rebates included in the Medicare bills for beneficiaries who enroll in private health plans. According to the Journal, congressional Republicans "have been happy to ignore" the higher CMS estimates, but the "wide gulf could be a problem" for the Bush administration because President Bush and Republicans must reach an agreement with Democrats on the private competition provision in the final Medicare bill before they can begin negotiations on a provision to add a prescription drug benefit to the program (Rogers, Wall Street Journal, 9/30).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.