Health reform costs could be $100 billion more than forecast

Republicans say a new estimate shows that Democrats rushed the law through, but the White House says critics are mischaracterizing potential spending.

By Doug Trapp — Posted May 24, 2010

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Amid the final push to adopt health reform legislation earlier this year, Congress' fiscal advisers weren't able to complete all of the cost estimates lawmakers requested. Republicans warned that Democrats and the Obama administration were moving too quickly to understand the law's impact.

Now a new Congressional Budget Office report estimates that the law authorizes at least tens of billions more in spending than previously thought, and Republican leaders are saying they were right. But an Obama administration official noted that much of the spending under question isn't new.

In a May 11 letter to Rep. Jerry Lewis (R, Calif.), the ranking GOP member on the House Appropriations Committee, the CBO said the Patient Protection and Affordable Care Act could cost taxpayers at least $115 billion more over a decade than the $940 billion estimate the CBO released in March, just before the bill's passage. That's because the law authorizes Congress to spend billions on several existing programs, including community health centers and health care for American Indians.

"Before trying to 'sell' the new health care law, the Obama administration may want to be honest about how much it's going to cost American taxpayers," said House Minority Leader John Boehner (R, Ohio) in a May 11 statement. "It was clearly irresponsible for Washington Democrats to force this legislation through Congress without being truthful about its full impact on the nation's finances."

President Obama said at the time that he would not support a health reform bill that cost more than $1 trillion. He also demanded that it reduce the federal deficit. In March, the CBO projected that the bill would lower the deficit by $138 billion by 2019, and possibly by much more in the following decade.

With the updated assessment, the law might not fulfill either of Obama's goals, according to the May 11 CBO letter. Lewis had requested the estimate of discretionary spending prior to enactment of the health reform law, but the CBO was overwhelmed with other health reform-related work at the time. Before the health reform law's passage, the agency had estimated that it authorized only about $60 billion in additional spending.

But Republicans are misquoting the CBO letter, according to Peter Orszag, PhD, director of the White House Office of Management and Budget. The health reform bill's actual cost still stands at $940 billion over a decade, because it authorizes spending but does not appropriate it.

Authorizations "are expressions of what Congress would like to spend money on, not what it will spend money on," Orszag wrote in a May 12 blog post. Congress still must adopt spending bills for the programs to be funded.

Also, Orszag noted, some of the largest authorizations in the law are for existing programs that are expected to have continued even without reform, such as $39 billion for American Indian health care and $34 billion for community health centers. "Funding such authorizations does not result in new spending," Orszag wrote.

The CBO released a follow-up letter on May 13 acknowledging that most of the $115 billion in question would support existing spending for ongoing programs. "Whether that spending will ultimately occur will depend on future appropriation actions," the letter concludes.

Finally, Orszag noted, Obama has promised to veto any non-security discretionary spending that isn't offset by new revenues or cuts elsewhere in the budget.

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Health reform's other costs

The new health reform law could cost taxpayers much more than a previous 10-year estimate of $940 billion because it authorizes spending on health care for American Indians and for other existing programs. However, the spending must be appropriated by Congress each year. Here are some of the items in question and their 10-year costs:

Indian Health Care Improvement Act $39.2 billion
Community health centers $34.0 billion
National Health Service Corps $9.1 billion
Cures Acceleration Network* $6.2 billion
State health care work force development grants $1.9 billion
Title VII loan repayment for public health professionals $1.3 billion
Centers of Excellence for Depression $1.1 billion

* The network devotes research funding to find cures for diseases and conditions not likely to be supported by private funding.

Source: Congressional Budget Office documents on the Patient Protection and Affordable Care Act, May

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