The head official at the Congressional Budget Office (CBO) delivered some souring news to lawmakers on Friday: the House's health reform bill will add $239 billion to the federal deficit over the next 10 years. That means the bill violates one of President Barack Obama's main principles (that it reduce costs for government) for reform, The Wall Street Journal notes.
The CBO's score of the bill totals $1 trillion in spending over the next decade. A healthy chunk of that spending is on adjustments to Medicare payments to physicians. The CBO says:
The provision that would result in the largest increase in Medicare spending would change payment rates for physicians' services to replace the 21 percent reduction in payment rates scheduled for January 2010, under the existing "sustainable growth rate" formula, with an inflation-based update. In subsequent years, rates would reflect separate updates for "evaluation and management" services and for all other services. CBO estimates that those changes would cost $228 billion over the 2010- 2019 period (before taking into account interactions). Including those interactions, the net cost of the changes in physicians' payment rates would total $245 billion.
The CBO also notes the bill provides some Medicare savings (see pg. 4 of CBO Director Douglas Elmendorf's letter):
- Permanent reductions in the annual updates to Medicare's payment rates for most services in the fee-for-service sector (other than physicians' services), yielding budgetary savings of $196 billion over 10 years (excluding interactions-namely, the effects of those changes on payments to Medicare Advantage plans and collections of Part B premiums);
- Setting payment rates in the Medicare Advantage program based on per capita Medicare spending in the fee-for-service sector, providing savings of $156 billion (before interactions) over the 2010-2019 period; and
- Changes to the Medicare Part D program that would establish a new prescription drug rebate program for some people who are eligible for both Medicaid and Medicare, while expanding drug coverage to beneficiaries that are currently subject to a gap in coverage (often referred to as the Part D "doughnut hole"), saving $30 billion over the 2010-2019 period.