Inside This Issue - News
Health care reform cost estimate rises
June 7th, 2010
WASHINGTON – The cost of reforming the nation’s health care system may be more than originally expected, a recent estimate from the Congressional Budget Office finds.
The report, one of several released in recent weeks that looked at parts of the reform package, says the health care overhaul will likely cost about $115 billion more in discretionary spending over 10 years than the original cost projections. If Congress approves the additional spending, it would lift the total estimated cost of health care reform over $1 trillion.
The CBO expects the federal agencies to spend $10 billion to $20 billion over 10 years on administrative costs to implement the overhaul, and it anticipates that Congress will spend an additional $105 billion over 10 years to fund discretionary programs in the overhaul.
The latest CBO estimates come in response to a request from Rep. Jerry Lewis (R., Calif.), the ranking member on the House Appropriations Committee. A spokeswoman for Lewis says the inquiry was filed before the House voted on the bill earlier this year.
The CBO estimated in March that the gross cost of the health care overhaul would be $940 billion over 10 years. The net cost over that same period was estimated at $788 billion. However, CBO cautioned that it could not estimate the reform package’s discretionary costs without more time and information.
The latest figures represent estimates as to how Congress will decide to spend money. The CBO cautions that lawmakers could decide to spend less.
Meanwhile, a study done by Mercer LLC, one of the nation’s largest employee benefits consulting firms, finds that more employers could face tax penalties because they offer health insurance that could be considered unaffordable to some employees. The study, based on a survey of nearly 3,000 employers, suggests that a little-noticed provision of the law could affect far more employers than Congress had assumed.
The provision says that if a company offers coverage but requires any full-time employees to pay premiums that amount to more than 9.5% of their household income, the coverage is deemed unaffordable, and the employer may have to pay a penalty.
The Mercer survey found that one-third of employers had some workers for whom coverage might be “unaffordable,” meaning that the workers’ share of premiums — in the absence of federal assistance — would consume more than 9.5% of their household income.
Mercer researchers note that because most employers do not have access to their workers’ household income information it could be difficult for them to know how many employees might find their health insurance plans unaffordable.
If an employer’s health plan is deemed unaffordable, affected employees may qualify for a subsidy to buy coverage in a state-based insurance exchange.
Workers seeking subsidies must disclose income information to the exchange, which will then notify employers if any of their workers qualify for the assistance. An employer offering unaffordable coverage is subject to a penalty of $3,000 a year for each full-time employee who gets government help to buy insurance in an exchange. The maximum penalty is $2,000 times the total number of full-time employees in excess of 30.
Retailers and restaurants with many low-wage workers are expected to be most affected by the unaffordable insurance provision. Employers with fewer than 50 employees are generally exempt from penalties.
As more details about the health care reform plan are released to the public, people’s confusion is slowly clearing up.
According to the Kaiser Family Foundation’s May Health Tracking Poll, 44% of the public remain confused about the overhaul package, down from 55% in April. Still, the poll finds that 35% of Americans do not understand how the law will affect them and their families.
The poll found that Americans remain fairly evenly divided on health reform, with 41% holding favorable views of the law, 44% holding unfavorable views and 14% undecided or unsure.
Those with favorable views of health reform tend to cite the law’s potential for increasing Americans’ access to health insurance and health care, and for making both more affordable, as the main reasons for their support. Those with unfavorable views had a wider range of reasons for their position, citing concerns about the cost of reform to the country and individuals, and opposition to the government’s perceived role in the changes as the main issues.