Cost of Senate health care bill pegged at $900 billion

Tax on insurance companies would help cover the costs.

The Congressional Budget Office has scored the draft of bipartisan healthcare overhaul legislation that the Finance Committee is working on at just under $900 billion, Senate Finance Committee Chairman Max Baucus, D-Mont., said Wednesday.

"The current draft of the bill scores below $900 billion over 10 years, covers 95 percent of all Americans by 2015, and is fully offset," Baucus said. "In fact, according to the preliminary CBO report, the bill would actually reduce the federal deficit the 10th year by several billion dollars."

Baucus added that the preliminary analysis determined the draft would increase employer-sponsored healthcare coverage. Baucus did not take questions; it is unclear what parts of the bill are included in the score.

The bipartisan group of senators also has largely settled on a tax on insurance companies to help cover the cost of the bill, sources said. The idea is to tax 35 percent on the value of plans above $8,100 for individuals and $21,000 for families. The offset would raise $180 billion over 10 years, sources said.

The Finance Committee was searching for an offset to fill the gap left after concerns from some Democrats and leadership forced them to back off taxing employer-based health benefits.

The scrapping of the offset favored by Baucus also left Finance members hunting for a way to make a significant dent in reducing the growth of healthcare spending, which the insurance tax is also expected to do.

Health insurers promptly expressed dismay.

"A new tax on healthcare coverage takes us in the wrong direction by making coverage less affordable for workers across the country. This new tax would disproportionately impact workers from higher-cost states, such as New York and California, as well as older workers who tend to have more comprehensive healthcare coverage," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans.

The negotiators' goal was to come in under $1 trillion and reduce the growth of healthcare spending, as evident by the deficit decrease. Baucus did not specify how much the deficit would shrink. CBO has said the overhaul versions by Senate Health, Education, Labor and Pension Committee Democrats and House Democrats would increase the growth of healthcare spending.

Whether a markup could proceed before August recess is unclear. Finance Committee staff stressed earlier Wednesday that a deal is not imminent.

"In fact, significant policy issues remain to be discussed among the members, and any one of these issues could preclude bipartisan agreement," said a statement from Finance staff.

Senate Budget Committee Chairman Kent Conrad, D-N.D., said at least two tough issues remain: how to handle people who have employer-sponsored health insurance but cannot afford out-of-pocket costs, and what the governors' reaction to a Medicaid expansion will be.

The committee is eyeing expanding Medicaid eligibility to those with incomes up to 133 percent of the poverty level, but states complain the provision is an unfunded mandate since they share in the cost of the low-income healthcare program.

Peter Cohn contributed to this report.