CBO Dissects the Kennedy/Dodd Bill

The Congressional Budget Office (CBO) appeared this morning before the HELP committee to answer questions about its analysis of the Kennedy/Dodd bill. There are a few important takeaways from CBO's comments:

  1. The Kennedy/Dodd bill will increase spending by more than $1.2 trillion, and this doesn't include the 10-year cost of the plan when fully implemented.The bill includes $723 billion in new spending, not including the $500 billion cost of expanding Medicaid assumed in the bill. CBO agreed with Senator Burr when he pointed out that the estimate includes only 6 years of full implementation of the program.
  2. If you like what you have, you can't keep it. The CBO confirmed that several million Americans would lose their employer-based health insurance they have now if Kennedy/Dodd becomes law.
  3. The Kennedy/Dodd version of a government-run plan will not lower health care costs. CBO repeatedly made clear that a government plan competing on a level playing field would have minimal impact.The only way the government plan would reduce costs is if it was "empowered" to reduce provider payments below market rates.CBO cautioned that reducing payment rates would cause a trade-off with provider access, as they noted has happened with Medicaid.
  4. The cost of expanding Medicaid to people above 150 percent FPL could surpass $500 billion, and CBO's estimate includes only the federal share of the expansion.The CBO estimate excludes the cost to state governments, which could be substantial.
  5. The costs of the pay or play mandate will be passed on to workers and will reduce their cash wages.This new tax on businesses also will also cause job losses, which CBO is now working to model.

Comments (4)

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  1. Joe S. says:

    Glad to see the CBO being clear that the burden of this reform will fall on the shoulders of the very people the reformers claim they are trying to help.

  2. John Goodman says:

    This is an Andy Chasin update I am posting as a comment:

    In response to a question from Senator Gregg in the HELP hearing, CBO Director Elmendorf just expressed strong skepticism that the Kennedy/Dodd bill would bend the cost curve for health care. In fact, quite the opposite. Elmendorf said, “This bill will add substantially to the long-term spending burden for health care on the Federal government.”

    This appears to pose a significant problem since President Obama said in his most recent press conference, “And I’ve said very clearly: If any bill arrives from Congress that is not controlling costs, that’s not a bill I can support.” With CBO’s clear statement, it doesn’t appear that President Obama could support Kennedy/Dodd.

  3. Ken says:

    Every time the CBO speaks on the subject of health care they reveal that the members of Congress putting the health reform packages together don’t know what they are doing.