With the House having passed its version of health care reform (H.R. 3962) and the Senate on the verge of passing its version (H.R. 3590), the outline of a final bill is beginning to take shape. In our new Issue Brief, we look ahead at the fiscal considerations that will likely be the subject of conference committee discussions and “end game” negotiations. These include the cost of expanding coverage, the methods used to prevent that cost from adding to the deficit, and the prospects for systemic reforms to reduce cost growth over time.
This issue brief gives The Concord Coalition’s perspective on how the bills measure up, what the risks are and how these risks could be lessened. We conclude that:• Both bills establish an important benchmark by achieving deficit reduction according to official cost estimates by the Congressional Budget Office (CBO). However, the fiscal outlook remains on an unsustainable track even with the modest deficit reduction achieved under either plan.• There are clear risks that some of the methods used to achieve deficit reduction in the official scores may not hold up over the long-term. • The revenue package in the Senate bill holds more promise to reduce the deficit than the House version because its largest component -- the high-cost insurance excise tax -- will better keep up with the growth rate of health care spending, and will also work to lower health care costs.
• Both bills contain many promising reform strategies to achieve long-term cost control. However, these strategies remain unproven and cannot be counted on to produce timely, reliable savings without a strong cost control mechanism such as the Senate’s proposed Independent Payment Advisory Board (IPAB).
The "Fiscal Risks" mentioned in the discussion include:
Spending offsets that are not maintained over time
“Curve benders” that don’t pan out or are not adopted more broadly
Failure to include an effective cost control mechanism
Lagging revenue increases
General revenue bailout of the CLASS provision
Inadequate premium subsidies, weak penalties, and a poorly designed exchange
In our conclusion we discuss the possible changes that could be added to the legislation to lessen these risks and further promote fiscal responsibility.
Every year the trustees of Social Security and Medicare issue detailed reports on the financial status of these programs. While the trustees’ reports consistently warn that both programs face serious shortfalls, the urgency of this warning is often undercut by undue attention to the years in which the Social Security trust funds and the Medicare Hospital Insurance (HI) trust fund are projected to become insolvent.
Health care programs are the largest and fastest growing in the federal budget. These programs include Medicare (providing health insurance for older Americans), Medicaid (providing health insurance for lower-income Americans), the Children’s Health Insurance Program, and subsidies for individuals to purchase private health insurance under the Affordable Care Act. Currently they comprise almost 30 cents out of every dollar spent by the federal government.