Federal Health Spending Under Reid Bill Is Double What He Claims
Actually $1.6 Trillion, Not $848 Billion

Media Inquiries: Véronique Rodman
[email protected] 202.862.4871

FOR IMMEDIATE RELEASE: November 20, 2009

Estimate Assumes Unrealistic Cuts to Medicare and Medicaid and Ignores Hundreds of Billions in Additional Spending Says AEI Budget Expert Joseph Antos

Senate majority leader Harry Reid (D-Nevada) has produced a health reform bill that would substantially increase the federal commitment to health spending warns former CBO official Joseph Antos, a health policy and budget expert.

It is widely believed that Senator Reid's bill will cost $848 billion over the next ten years. That is incorrect, points out AEI's Antos. Under the proposal, the federal government will spend additional sums for long-term care, payments to the public insurance plan, and other initiatives. Moreover, the bill includes hundreds of billions of dollars in Medicare and Medicaid savings that will never be collected. Antos explains that the Reid bill is likely to cost $1.6 trillion over the next decade, and substantially more than that in the future.

Key points:

  • The total amount of new federal health spending in the bill needs to be recognized, not only the cost of expanding health insurance coverage. Additional spending in the Reid bill raises the cost to $1.2 trillion through 2019. That figure includes the cost of increased spending for long-term care insurance, subsidies to the health insurance exchanges, payments to the public insurance plan, and new spending in Medicare and Medicaid.

  • The CBO estimate assumes that Congress will cut Medicare payments to physicians by $245 billion over the next decade. The cuts will never happen. Those cuts, strongly opposed by the American Medical Association, are required under the "sustainable growth rate" (SGR) formula. In all but one year, Congress has overridden fee cuts required by the SGR. Reid's bill rolls back the 21 percent cut scheduled for January 2010. Future Congresses will undoubtedly do the same.

  • The Reid bill includes at least an additional $150 billion cut in payments to Medicare and Medicaid providers that will never be collected. There are $470 billion in Medicare and Medicaid cuts in the bill. However, across-the-board cuts in Medicare payment to hospitals, home health agencies, skilled nursing facilities, and other providers will be every bit as difficult to enforce as the physician fee cuts. Political pressures in future years could cut those savings by a third.

  • Accounting for potentially $400 billion in lost savings in payments to physicians and other providers, the Reid proposal increases federal health spending by $1.6 trillion over the next decade.

  • The Reid bill will likely increase the deficit by $270 billion over the next ten years. CBO estimates that the proposal will reduce the federal budget deficit by $130 billion through 2019. But that assumes more savings in Medicare and Medicaid than is plausible given Congress's track record. The additional $400 billion in extra federal health spending in those programs means higher deficits that will continue to grow well into the future.

Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI. He is also a commissioner of the Maryland Health Services Cost Review Commission, and a health adviser to the Congressional Budget Office. Before joining AEI, Mr. Antos was Assistant Director for Health and Human Resources at the Congressional Budget Office.

Mr. Antos is available for interviews and can be reached at [email protected] or through his research assistant [email protected] or 202.862.4876. For additional media inquiries, please contact Véronique Rodman at [email protected] or 202.862.4871.

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

To secure southern border, US must lead international effort to stabilize Central America
image The Ryan pro-work, anti-poverty plan: Thomas Aquinas 1, Ayn Rand 0
image Does SNAP support work? Yes and no
image Obama Democrats lose their big bet on health exchanges
AEI on Facebook
Events Calendar
  • 21
  • 22
  • 23
  • 24
  • 25
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.