The Congress is considering the pending health care legislation in two components: One is a bill (H.R. 3590) that the Senate passed in December; the other is a reconciliation bill that would modify the Senate-passed bill in a number of ways. (In general, a reconciliation bill seeks to implement instructions in the Congressional budget resolution in order to achieve the budgetary goals set forth in that resolution; special parliamentary procedures apply to the consideration of such bills.)
CBO and the staff of the Joint Committee on Taxation (JCT) have just completed a preliminary estimate of the direct spending and revenue effects of the reconciliation proposal that was made public on March 18, 2010. (Direct spending is spending that would result from enactment of this proposal without any further legislation. The estimate does not encompass discretionary spending, which would be subject to future action in appropriation bills.)
The estimate is presented in three ways:
Although CBO completed a preliminary review of legislative language prior to its release, the agency has not thoroughly examined the reconciliation proposal to verify its consistency with the previous draft. This estimate is therefore preliminary, pending a review of the language of the reconciliation proposal, as well as further review and refinement of the budgetary projections.
The reconciliation proposal includes provisions related to health care and revenues, many of which would amend H.R. 3590; those provisions account for most of the budgetary impact of the proposal. It also includes amendments to the Higher Education Act of 1965, which authorizes most federal programs involving postsecondary education; the education provisions account for net outlay savings of about $19 billion over the 2010-2019 period.
Although CBO does not generally provide cost estimates beyond the 10-year budget projection period, certain Congressional rules require some information about the budgetary impact of legislation in subsequent decades, and many Members have requested CBOs analyses of the long-term budgetary impact of broad changes in the nations health care and health insurance systems. Therefore, CBO has developed a rough outlook for the decade following the 2010-2019 period. We estimate that the combined effect of enacting H.R. 3590 and the reconciliation proposal would be to reduce federal budget deficits over the ensuing decade relative to those projected under current lawwith a total effect during that decade that is in a broad range around one-half percent of gross domestic product (GDP).