Discretionary Spending Could Add $115B to Reform Costs, CBO Says

On Tuesday, the Congressional Budget Office on Tuesday issued an updated cost analysis of the new health reform law, estimating that the overhaul likely would cost about $115 billion more over 10 years if Congress approves all of the discretionary spending included in the legislation, the AP/San Francisco Chronicle reports (Alonso-Zaldivar, AP/San Francisco Chronicle, 5/12).

The additional spending falls under three categories:

• Administrative costs to federal agencies to implement the new reform law;
• "Explicit authorizations" for various grant and program spending for which funding levels have been specified; and
• Explicit authorizations for spending for which funding levels are unspecified (Reichard, CQ Today, 5/11).

Cost Analysis Details

According to CBO's new estimates:

• HHS would require $5 billion to $10 billion to administer changes to Medicare, Medicaid, CHIP and the health insurance industry;
• The Internal Revenue Service would need $5 billion to $10 billion to implement new rules on premium rates and cost-sharing credits;
• An additional $105 billion over 10 years would be required to pay for various discretionary programs (Haberkorn, Politico, 5/11). Those programs include creating and expanding community health centers ($34 billion), funding Native American health care ($39.1 billion) and expanding physician care services to medically underserved regions through the National Health Service Corps ($9 billion) (CQ Today, 5/11).

Difference From Previous Estimates

Pending approval by Congress, the total cost of the overhaul would surpass the $1 trillion mark that Democrats had sought to avoid (Politico, 5/11).

In March, CBO estimated that the overhaul would cost $940 billion over 10 years and cut the federal deficit by $130 billion. CBO also estimated the legislation would reduce the federal deficit by $1.2 trillion over the second decade (McCarthy, CongressDaily, 5/12).

CBO analysts at the time said they could not provide discretionary cost estimates because of a lack of information and time (AP/San Francisco Chronicle, 5/12).

In a letter accompanying the new analysis, CBO Director Douglas Elmendorf wrote that the new reform law "establishes a number of new programs and activities, as well as authorizing new funding for existing programs." He added, "By their nature, however, all such potential effects on discretionary spending are subject to future appropriation actions, which could result in greater or smaller costs than the sums authorized by the legislation" (Politico, 5/11).

Republicans, White House Respond to Analysis

House Minority Leader John Boehner (R-Ohio) said CBO's new estimate "provides ample cause for alarm" because it would nearly eliminate "the purported deficit reduction in the law" (CQ Today, 5/11). Other GOP lawmakers echoed Boehner's criticism that the discretionary spending would offset the purported savings of the law (AP/San Francisco Chronicle, 5/12).

However, Kenneth Baer, communications director for the White House Office of Management and Budget, said that the savings in the overhaul "will not change unless Congress acts to change it," noting that if Congress funds the discretionary items "they must be offset somewhere else in the discretionary budget" (Pecquet, "On the Money," The Hill, 5/11).