House Democrats' Health Reform Proposal: Preliminary Analysis of Major Provisions Related to Insurance Coverage

July 14, 2009

CBO and the staff of the Joint Committee on Taxation (JCT) worked together to produce a preliminary analysis of the major provisions related to health insurance coverage that are contained in draft legislation called the Americas Affordable Health Choices Act, which was released today by several House committees. Among other things, those provisions would establish a mandate for most legal residents to obtain insurance, significantly expand eligibility for Medicaid, and set up insurance exchanges through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage. The analysis issued today does not take into account other parts of the proposal that would raise taxes or reduce other spending (particularly in Medicare) in an effort to offset the federal costs of the coverage provisions.

The tables included in the report summarize our preliminary assessment of the coverage provisions budgetary effects and their likely impact on rates and sources of insurance coverage for the nonelderly population. According to that assessment, enacting those provisions by themselves would result in a net increase in federal budget deficits of $1,042 billion over the 20102019 period. By 2019, CBO and the JCT staff estimate, the number of nonelderly people who are uninsured would be reduced by about 37 million, leaving about 17 million nonelderly residents uninsured (nearly half of whom would be unauthorized immigrants).

The figures released today do not represent a formal or complete cost estimate for the draft legislation. First, as noted above, these figures do not address the entire bill. Second, the analysis was based on specifications that were provided by staff of the three committees and that differ in important ways from the discussion draft version of legislative language that was released in June. The specifications that we analyzed are supposed to be reflected in the draft language released by the committees today, but we have not yet been able to analyze that language to determine whether it conforms to those specifications. Third, our analysis does not incorporate the administrative costs to the federal government of implementing the specified policies nor all of the proposals likely effects on spending for other federal programs; we expect to include those effects in the near future, and we do not expect that they will have a sizable impact on our estimates. Finally, the budgetary information reflects many of the major cash flows that would affect the federal budget as a result of implementing the specified policies, and it provides our preliminary assessment of the proposals net effects on the federal budget deficit. Some additional cash flows would appear in the budgeteither as outlays and offsetting receipts or outlays and revenuesbut would net to zero and thus would not affect the deficit.

CBO will continue to work on an ongoing basis with the House and Senate committees involved in health care reform to provide estimates and analyses as legislation is considered.