The focus on the cost of health care reform comes from the Congressional Budget Office (CBO), a non- partisan body that estimates the cost of major legislative proposals and the revenue produced by tax changes. The cost of the Senate’s HELP Committee (Chaired by Sen. Kennedy) is estimated by CBO to be one trillion dollars over the next ten years. The cost of the Senate finance bill, which covers Medicare and Medicaid, is estimated at $1.6 trillion. Finance Committee Chair Senator Max Baucus has said that his committee’s bill must be cut by one-third to be politically viable. Since the content of these bills is not public, one can only speculate where the cuts will be made or taxes increased. Several reports have circulated that eligibility for insurance subsidies for people below 400 percent of the federal poverty level will be tightened; as well as requiring businesses that do not offer health insurance benefits to pay higher fees and taxes.

The CBO cost estimates have significantly slowed progress on health reform in the Senate. Bills which were expected in May will likely not be public until late summer or early fall. Meanwhile, the House of Representatives has drafted legislation and is trying to move ahead on a more aggressive schedule than the Senate.

The trade-offs in health reform are clearly evident in the proposal by former Senate Majority Leaders Baker, Daschle and Dole. The full report is available from the Bipartisan Policy Institute. The Baker, Daschle, Dole report estimates that covering 46 million uninsured people will cost $1.2 trillion over 10 years and that half of that cost would have to be paid for in new taxes. Anticipated savings come largely from slowing the growth in Medicare and Medicaid spending through payment and delivery reforms. New revenue sources are expected primarily from capping tax credits for high cost health insurance plans and fees from companies that don’t offer health insurance benefits. Conspicuously, the Baker, Daschle, Dole plan does not include a public insurance option open to all citizens.

The creation of a public insurance option is seen by many as critical to containing private sector health care costs. President Obama on June 23 called a strong federal presence in the health insurance market place the only way to ensure that all American’s have access to affordable coverage and that spiraling health care costs can be controlled. Private insurers and providers are being asked to produce savings of at least one trillion dollars during the next ten years. There has been little realistic discussion about how these savings might occur. 

The policy debate on insurance coverage hinges on how cost, savings and new revenue estimates are calculated. The Congressional Budget Office estimates contain an expense for preventive services but do not have a methodology for calculating savings due to expanded preventive services. The same is true for primary care services and medical homes. One widely discussed and easily measurable policy option is to reduce the disproportionate share and graduate medical education payments as insurance coverage expansion decreases the sots of uncompensated care to hospitals. 

Although progress has slowed, Congressional leaders and President Obama are optimistic that health reform will occur in 2009. The contours of the path to reform are becoming clearer even though the pace has slowed.