Obamacare: The tab just went up

Before you read this, check the update here.

CBO estimates that doing all the stuff the health care bill calls for will cost $115 billion more than previously estimated.

That amount is spread over 10 years and amounts to about $40 a year per person. It is also about 15% more than the original spending estimate. Originally CBO estimated that the entire program – including tax increases – would cut the deficit by $143 billion. This estimate implies the entire package is more or less revenue neutral.

CBO didn’t analyze this piece with the rest of Obamacare because it is all considered discretionary. Congress has said it will spend on these particular items, but it is not forced to. In Washington wonkdom, like in insurance, cash is king. There’s a big gap apparently between promising you’ll spend something and actually putting the money on the table. And these are the programs that got the promise but not the cash.

Even so, it’s pretty clear the government will have to spend something for the IRS to monitor who is eligible for which part of the program. (Remember, a lot of people will qualify for subsidies based on income.) That’ll cost $5 billion to $10 billion over 10 years, CBO now says. The government also needs $5 billion to $10 billion to get Medicaid, CHIP and Medicare lined up the way they need to be under the new program.

But the big items here are $34 billion for community health care and $39 billion for Native American health care. These items were mentioned in the legislation, but no money was appropriated for them. Once those programs get rockin’ they could get less money appropriated to them, or none at all. That’s one reason the Obama people are sanguine.

The other is the budget rules these programs fall under. If one of these programs gets money, somebody else will get that much less. If Congress decides to spend $34 billion on community health care, it will have to spend $34 billion less on other stuff.

Still, Republicans are steamed. And as CBO notes, there is another category of spending in the bill. That’s money for programs that are in the bill but didn’t even get a promise of cash. CBO has no estimate for that.

The CBO director has a blog post about the matter. The actual report is here.


2 thoughts on “Obamacare: The tab just went up

  1. Don Bashline says:

    Let me say first, I’m also a casualty actuary, and have much enjoyed reading your blog – it brings a perspective which (I’m sure you already know) is unfortunately underrepresented not only on the internet, but all through the media.

    Let me say second that there’s another view on what the CBO report says about HCR – see http://bit.ly/98ocOH for more details.

  2. […] rising price tag: Never mind! Yesterday I posted about a CBO report that found another $105 billion in spending over 10 years on health care reform. […]

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