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The Congressional Budget Office is out with its analysis of the House Democrats' health care bill. The headline number -- likely to be widely cited in media accounts -- is that the bill costs $894 billion over 10 years. But in reality, the CBO says that the gross cost of the bill will be $1.055 trillion. The $894 billion number reflects the taxes being paid by individuals who don't have insurance and employers who don't provide insurance.

In addition, the bill relies on some of the same budgetary gimmicks as the Senate Finance Committee's bill. Once again, we see that the Democrats backload the spending provisions into the final six years of the CBO's 10 year budget window to make it appear cheaper. Specifically, the CBO says the bill's gross spending will be $60 billion in the first four years, and $995 billion in the next six years (or 94 percent of the total).

Also, while the CBO says that the bill will reduce deficits by $104 billion over 10 years and keep reducing the deficit (albiet slightly) beyond that, it cautions that these estimates assume that proposed budget cuts will actually get enacted by future members of Congress. "These longer-term projections assume that the provisions of H.R. 3962 are enacted and remain unchanged throughout the next two decades, which is  often not the case for major legislation," the CBO director Douglas Elmendorf wrote. "The long-term budgetary impact of H.R. 3962 could be quite different if those provisions generating savings were ultimately changed or not fully implemented."

The CBO estimate doesn't include the more than $200 billion it will cost to prevent scheduled cuts to doctors' payments under Medicare, which Democrats intend to pass through separate legislation.

The bill would also add 15 million people to the Medicaid rolls, costing states an additional $34 billion over 10 years.

Another thing to keep in mind is that the CBO report doesn't say anything about whether the bill actually bends the health care cost curve. To be clear, while it estimates -- with caveats -- that the bill will reduce deficits, that isn't the same thing as reducing national health care expenditures, which is how people derive all those statistics about how high of a percentage of GDP we spend on health care compared with other countries. If you hike taxes high enough, you can get the CBO to say it reduces deficits on paper, but that's a lot different from bringing down the actual costs of health care to our nation.

View all comments (2) | Leave a comment

Stan Redmond| 10.29.09 @ 6:25PM

This CBO report and moronic democrat party also assume that no changes to behavior will come about from this legislation. Doctors will now be slaves to the state by having their labor controlled by the state. How many doctors will we lose? If doctors decide to stay how much tax revenues do they fail to pay with lower salaries? And what incentives will people have to even buy insurance and take care of themselves when they know we will be covered regardless? Medical device makers? When they pass on the costs of their devices who will be paying the bill? The consumer, you and I, and with the government running the programs we pass that on to the government. This has to be the third worst piece of garbage ever to come out of congress following social security and the federal income tax tax.

Carolyn| 10.30.09 @ 9:18AM

Government tyranny and inefficiency at its best. Pelosi should be so proud

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More Blog Posts by Philip Klein

http://spectator.org/blog/2009/10/29/cbo-house-bill-costs-1055-tril

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