June 2009
Today CBO delivered letters to Senators Kent Conrad and Judd Gregg that respond to their request for information about the features of health care reform proposals that would affect federal spending on health care over the long term. In the absence of significant changes in policy, rising costs for health care will cause federal spending to grow much faster than the economy, putting the federal budget on an unsustainable path.
CBO was asked to review the documents, accompanying a letter to the President, in which a group of health care industry stakeholders describe their commitments to reduce health care costs, strengthen quality, and improve access, with a particular focus on their potential effects on the federal budget and on the cost or savings that might be attributed to legislation.
CBO has updated its analysis of the policy proposals contained in the Presidents budget to incorporate details on some of the proposals that were made available with the release of the Presidents full budget proposal on May 7th.
CBO and the Joint Committee on Taxation staff worked together to produce a preliminary analysis of the major provisions related to health insurance coverage contained in the Affordable Health Choices Act, drafted by the Senate Committee on Health, Education, Labor, and Pensions (HELP). The estimates are based on provisions from title 1 of the draft legislation released by HELP on June 9th.
In preparing its economic forecast published in September 2008, CBO estimated that 40 percent of the tax rebates issued in the spring and summer under the Economic Stimulus Act of 2008 would be spent within six monthsraising the growth of consumption in the second and third quarters of 2008 by 2.3 percent and 0.2 percent, respectively, and reducing it by 1.0 percent in the fourth quarter, when the distribution of the rebates was expected to end. However, analysts disagree about the economic impact of tax rebates.
Yesterday, I explained how CBOs cost estimates take into account behavioral responses to proposed new federal laws, including the effects of such responses on spending for federal health care programs such as Medicare and Medicaid. In that discussion, I noted that exceptions to this practice occasionally occur because budget scorekeeping rules specify that only certain types of spending effects can be considered for Congressional budget enforcement purposes.
CBOs long-standing practice in formulating cost estimates is to look for evidence that proposed policies would affect peoples behavior in ways that would generate budget savings or costs and then to include such behavioral responses in our analysis.
CBO just released a cost estimate for the American Clean Energy and Security Act of 2009 (H.R. 2454), which was recently approved by the House Committee on Energy and Commerce. This legislation would make a number of changes in energy and environmental policies largely aimed at reducing emissions of gases that contribute to global warming. The bill would limit (or cap) the quantity of certain greenhouse gases emitted from facilities that generate electricity and from other industrial activities over the 2012-2050 period.
The TRICARE program provides health care for members of the uninformed services, for military retirees, and for their familiesthe more than 9 million people eligible to use its integrated system of military health care facilities and providers and regional networks of contracted civilian providers. User fees for TRICARE beneficiaries have remained the same (or even been reduced) since the mid-1990s, when the current program was first set up. At the same time, taxpayers costs for the program have risen dramatically.