H.R. 2575, updated estimate of the budgetary effects of the Save American Workers Act of 2013

Cost Estimate
July 17, 2014

Letter to the Honorable Dave Camp

The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have completed an updated estimate of the budgetary effects of H.R. 2575, the Save American Workers Act of 2013. Relative to the baseline budget projections at the time the bill was ordered reported by the House Committee on Ways and Means, CBO and JCT estimated that enacting the bill would increase budget deficits by $73.7 billion over the 2015-2024 period. However, based on the April 2014 baseline projections, CBO and JCT now estimate that enacting H.R. 2575 would increase budget deficits by $45.7 billion over that period.

H.R. 2575 would alter the calculation of the number of full-time-equivalent employees for the purposes of determining which employers are subject to penalties under the Affordable Care Act for not offering health insurance for their employees or for offering insurance that does not meet certain criteria specified in the law. In addition, the legislation would change the definition of “full-time employee” used for the calculation of those penalties. Specifically, the bill would raise the threshold that defines full-time employment from 30 hours per week under current law to 40 hours per week.

Those changes in the law regarding employer penalties would reduce the amount of penalties collected. In addition, as CBO and JCT explained in the previous cost estimate, the changes would alter the sources of health insurance coverage for some people. For all years between 2015 and 2024, slightly fewer people are estimated to receive employment-based coverage; slightly more people to obtain coverage through Medicaid, the Children’s Health Insurance Program (CHIP), or health insurance exchanges; and slightly more people to be uninsured.

CBO and JCT’s estimate of the 10-year cost of enacting H.R. 2575 has fallen by $28 billion primarily because the agencies now estimate that the bill would affect a significantly smaller number of workers than was previously estimated. In updating their baseline projections, the agencies generally incorporate changes in their models, as well as recent legislation and revisions to the economic outlook. Such technical changes in the latest baseline substantially reduced the number of workers who are estimated to have worked between 30 and 40 hours per week in recent years (and increased the number estimated to have worked 40 or more hours per week). As a result, CBO and JCT now expect that enacting H.R. 2575 would exempt fewer employers from paying penalties than the agencies previously expected, thereby generating a significantly smaller estimated reduction in penalty collections.