Discretionary Spending in the Final Health Care Legislation

May 11, 2010

Today CBO provided some additional information about the potential effects of H.R. 3590, the Patient Protection and Affordable Care Act (PPACA, Public Law 111-148), on discretionary spending (that is, spending that is funded through the annual appropriation process). This information updates and expands upon the analysis of potential discretionary spending under PPACA that CBO issued on March 15, 2010. By their nature all such potential effects on discretionary spending are subject to future appropriation actions, which could result in greater or smaller costs than the sums authorized by the legislation.

CBO does not have a comprehensive estimate of all of the potential discretionary costs associated with PPACA, but we can provide information on the major components of such costs. Those discretionary costs fall into three general categories:

  • The costs that will be incurred by federal agencies to implement the new policies established by PPACA, such as administrative expenses for the Department of Health and Human Services and the Internal Revenue Service for carrying out key requirements of the legislation.
  • Explicit authorizations for future appropriations for a variety of grant and other program spending for which the act identifies the specific funding levels it envisions for one or more years. (Such cases include provisions where a specified funding level is authorized for an initial year along with the authorization of such sums as may be necessary for continued funding in subsequent years.)
  • Explicit authorizations for future appropriations for a variety of grant and other program spending for which no specific funding levels are identified in the legislation. That type of provision generally includes legislative language that authorizes the appropriation of “such sums as may be necessary,” often for a particular period of time.

CBO estimates that total authorized costs in the first two categories probably exceed $115 billion over the 2010-2019 period. We do not have an estimate of the potential costs of authorizations in the third category.

CBO previously issued an estimate of the direct spending and revenue effects of PPACA, in combination with the Reconciliation Act of 2010 (Public Law 111-152), which amended it.  (Direct spending effects are those that do not require subsequent appropriation action.)  CBO estimated that those two laws, in combination, would produce a net reduction in federal deficits of $143 billion over the 2010-2019 period as a result of changes in direct spending and revenues.