CBO sees deficits beyond 10-year window

The Congressional Budget Office has told key Republican lawmakers that the House Democrats' health care overhaul bill "would probably generate substantial increases in federal budget deficits during the decade beyond the current 10-year budget window."

CBO's analysis, released Sunday, was based on information requests from Ways and Means ranking member Dave Camp, R-Mich., Energy and Commerce ranking member Joe Barton, R-Texas, Education and Labor ranking member John Kline, R-Minn., and Budget ranking member Paul Ryan, R-Wis.

CBO previously determined the legislation would increase the federal deficit by $239 billion during the 10-year budget window.

"When you find yourself in a hole, the first rule is to stop digging. But with this bill, the Democrats keep digging a bigger and bigger deficit hole, and now we have CBO confirming it," Camp said Sunday.

According to CBO, the proposal limits the percentage of income eligible people have to pay when purchasing insurance and specifies that insurance plans must cover a specified portion of health care costs.

"Combining those provisions, increases in healthcare spending in excess of the rate of growth in income would be borne entirely by the federal government in the form of higher subsidy payments," CBO determined.

Democrats focused on other portions of CBO's report, calling attention to the agency's determination that the House Democrats' bill would expand employer-based health care coverage and that Medicaid expansion would not crowd private insurers out of the market.

CBO estimates 3 million more people will receive health care coverage through their employer under House Democrats' health care overhaul bill. Nine million either would drop their employer coverage in favor of joining a health care exchange or have it canceled by their employer. But 12 million people now lacking employer-based health benefits would have it under the new law by 2016.

CBO said businesses would not reduce operating costs under the "pay-or-play" scenario because they would need to increase wages to compensate for the lack of insurance offered. Under the pay-or-play mandate, employers that do not offer insurance would pay a penalty equal to 8 percent of payroll. Health insurance accounts for an average cost of 12 percent of payroll, according to CBO.

The agency determined that 6 million people at qualifying firms would receive coverage through the exchange, and one-third of those would enroll in the public option. The estimate is based on the assumption the exchange will be opened to businesses with 50 or fewer employees.

Even if the government makes the exchange available to most large firms, CBO noted its estimate of people who would enroll in the public plan would be much lower than the oft-quoted Lewin Group estimate of 100 million.

CBO believes employers would have lower administrative costs for enrolling their employees in a private insurance plan outside of the exchange, where the public plan would be offered, because employees in the exchange must be enrolled individually. CBO also estimates the difference between private insurance and public plan premiums would not be as great as the Lewin Group estimated.

The House Democrats' bill also would cause 1 million people who would have had insurance to enroll in Medicaid, CBO found, and 10 million uninsured to enroll in the low-income health care program.

CBO estimates that the coverage scenarios would have "modest" effects on premiums for private insurance plans offered through employers. That reasoning depends on a firewall installed in the legislation that would keep the risk pool for employers largely the same, given the bill prohibits those with an offer of employer-based insurance from gaining a subsidy to pay for coverage through the exchange.

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