Last week, the Senate Finance Committee's America's Healthy Future Act of 2009 was sent to the Congressional Budget Office (CBO) for a complete score of the projected cost for the proposed measures. The CBO and staff of the Joint Committee on Taxation (JCT) released its preliminary analysis this week.

As recapped in the CBO's letter to Senator Baucus, the Chairman's Mark includes a mandate for most legal U.S. residents to obtain health insurance, insurance exchanges where some individuals and families could receive federal subsidies to purchase coverage, expanded eligibility for Medicaid, reduction in growth of Medicare's payment rates for most services, imposition of an excise tax on insurance plans with high premiums, and other changes to the Medicaid and Medicare programs and the federal tax code.

The major news is the savings and the projected cost. According to the CBO and JCT's assessment, the Mark as amended would result in a net reduction in the federal budget deficit of $81 billion over 2010-2019. The Mark has a projected gross cost of $829 billion and net cost of $518 billion over 10 years for the proposed expansion in insurance coverage. The cost includes $345 billion in additional federal spending for Medicaid and CHIP, and $461 billion in federal subsidies to purchase coverage through the new insurance exchanges and the reduction in revenue by the tax credit for small employers by $23 billion over ten years. The cost of the expansion in coverage would be offset by the projected revenue of $311 billion from sources including the net revenue from the excise tax on high-premium insurance plans (net revenues: $201 billion), penalty payments from uninsured individuals ($4 billion), penalty payments from employers whose workers received subsidies for the exchanges ($23 billion), and other provisions including tax revenues (reducing the deficits by $83 billion).

The CBO and JCT also estimate that by 2019 the number of non-elderly people who are uninsured would be reduced by about 29 million, leaving about 25 million non-elderly residents uninsured (one-third of those would likely be unlawful immigrants). The number of legal non-elderly residents with insurance coverage is estimated to rise from about 83 percent to about 94 percent. About 23 million people would purchase coverage through the new insurance exchanges, and an estimated 14 million more enrollees would be eligible for Medicaid and CHIP than is projected under current law. Several million fewer people are projected to purchase individual coverage outside the exchanges or obtain coverage through employers. In addition, the CBO analysis suggests that the cooperative insurance plans to be offered through the new health insurance exchanges are unlikely to establish a significant market presence in many areas.

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