Reconciliation Recommendations of the House Committee on Energy and Commerce

Cost Estimate
April 27, 2012

As approved by the House Committee on Energy and Commerce on April 25, 2012

H. Con. Res. 112, the Concurrent Budget Resolution for fiscal year 2013, as passed by the House of Representatives on March 29, 2012, instructed several committees of the House to recommend legislative changes that would reduce deficits over the 2012-2022 period. As part of this process, the House Committee on Energy and Commerce approved legislation on April 25, 2012, with a number of provisions that would reduce deficits.

In total, CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting the legislation would reduce deficits by about $2.9 billion over the 2012-2013 period, by $45.9 billion between 2012 and 2017, and by $113.4 billion over the 2012-2022 period, assuming enactment on or near October 1, 2012. These figures represent the net effect of changes in direct spending and revenues as a result of the legislation. About $1.4 billion of the reduction for 2012 through 2022 would be off-budget, from net increases in Social Security tax receipts.

In addition, the Chairman of the House Committee on the Budget has directed CBO to prepare estimates assuming a July 1, 2012, enactment date for this year’s reconciliation proposals. If the legislation were enacted by that earlier date, some of the provisions would result in greater reductions in direct spending than those estimated assuming enactment on or near October 1, 2012. Under the alternative assumption of a July 1 enactment date, CBO and JCT estimate that the legislation would reduce deficits by $3.9 billion over the 2012-2013 period, by $48.0 billion between 2012 and 2017, and by $115.5 billion over the 2012-2022 period.

The Committee’s recommendations would make the following changes:

  • Title I would eliminate funding for certain provisions of the Affordable Care Act (ACA), by repealing the authority for the Secretary of Health and Human Services (HHS) to provide grants to states for establishing health insurance exchanges, repealing the Prevention and Public Health Fund, and rescinding funding for loans for the Consumer Operated and Oriented Plan (CO-OP) program.
  • Title II would make changes to Medicaid and the Children’s Health Insurance Program (CHIP) by limiting states’ ability to tax health care providers, reducing Medicaid payments to states for hospitals that serve a disproportionate share of poor and uninsured patients, repealing certain requirements that states maintain Medicaid and CHIP eligibility rules and procedures, limiting Medicaid payments to U.S. territories, and repealing performance bonuses under CHIP.
  • Title III would impose limits on medical malpractice litigation in state and federal courts by capping awards and attorney fees, modifying the statute of limitations and the “collateral source” rule, and eliminating joint and several liability.

The legislation contains an intergovernmental mandate as defined in the Unfunded Mandates Reform Act (UMRA) because it would preempt state laws that provide health care providers and organizations less protection from liability, loss, or damages. CBO estimates the cost of complying with the mandate would be small and would fall well below the threshold established in UMRA for intergovernmental mandates ($73 million in 2012, adjusted annually for inflation).

The legislation contains several mandates on the private sector, including caps on damages and on attorney fees, the statute of limitations, and the fair share rule. The cost of those mandates would exceed the threshold established in UMRA for private-sector mandates ($146 million in 2012, adjusted annually for inflation) in four of the first five years in which the mandates were effective.