Democrats challenged on cost of health bill

By Lori Montgomery
Saturday, October 31, 2009

Republicans on Capitol Hill are challenging an assertion by House leaders that their new health-care package comes in under President Obama's spending limit of $900 billion over the next decade. The true cost of the measure, the GOP argues, is more than $1 trillion.

A House leadership aide dismissed the charge as "GOP spin." But, in this case, the spin is essentially true.

According to a preliminary estimate by the nonpartisan Congressional Budget Office, expanding coverage to an additional 36 million Americans would cost $1.055 trillion over the next decade under the House plan, counting tax breaks for small businesses, subsidies for low- and moderate-income families, and the largest expansion of Medicaid since its inception more than 40 years ago.

House leaders prefer to emphasize a different number: the net cost of expanding coverage. That's $1.055 trillion minus money that would be raised from penalties on people who failed to buy insurance and employers that failed to offer it. Those adjustments would bring the cost down to $894 billion over 10 years, just under Obama's limit.

Obama is fine with that. The House bill "is consistent with his target price tag," said White House spokeswoman Linda Douglass. Plus, Douglass said, "it doesn't add to the deficit, and that's extremely important."

Still, Democrats have a bit of a consistency problem: Democratic leaders in the Senate use the gross cost of expanding coverage. If they switched to House math, the price tag of a bill passed by the Senate Finance Committee this month would be $518 billion -- nearly $400 billion less than the House bill.

In a letter Friday to key lawmakers about the House bill, CBO Director Douglas Elmendorf did not mention the $894 billion figure, sticking instead with the "gross cost of the coverage expansions . . . about $1,055 billion during the 2010--2019 period."

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