CBO Cost Estimate Offers Good News, Bad News for Reform Proponents

Updated 7:56 p.m.
By Lori Montgomery
The first cost-estimate for health-care reform is out from the Congressional Budget Office, and it's hard to tell what it bodes for the Obama administration's signature initiative.

In a preliminary estimate, the CBO reports that a measure establishing health exchanges to help people find insurance and providing federal subsidies for some applicants would cost the federal government about $1 trillion over the next decade.

That's significantly less than some outside estimates and within striking distance of the $948 billion President Obama has offered to pay for reform.

The bad news is, it's a partial price tag: The CBO did not attempt to attach a cost to other parts of the bill. And the bill itself is incomplete. Lawmakers have been talking about adding an expansion of Medicaid, the federal health program for the poor, which would substantially jack up the overall price.

More not-so-good news: While exchanges would provide coverage to an estimated 39 million of the 46 million people who are currently uninsured, it would cause others to lose their insurance, the CBO predicts.

People covered by employer-sponsored insurance would decline by about 15 million (10 percent) and "coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million," the report says.

The bill was drafted by the Senate Committee on Health, Education, Labor and Pensions, which is chaired by Sen. Edward M. Kennedy (D-Mass.). A Kennedy spokesman predicted that the final legislation will include cost-saving provisions that would bring the size of the cost-estimate back down.

"In our effort to find common ground with our Republican colleagues, the majority on the HELP committee filed a bill with blank spaces to allow time for more bipartisan consensus to develop. We knew that this process would produce this estimate," said committee spokesman Anthony Coley. "The preliminary analysis that CBO has provided of this proposal has highlighted the importance of filling in those blanks and we will fill them in the upcoming markup. Doing so will lower the bill’s overall cost."

The CBO director's blog has a link to the full report.