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Letter to the Honorable Harry Reid 1 (November 2009)

handle is hein.congrec/cbo9371 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W.Elmendorf, Director U.S. Congress Washington, DC 20515 November 18, 2009 Honorable Harry Reid Majority Leader United States Senate Washington, DC 20510 Dear Mr. Leader: The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have estimated the direct spending and revenue effects of the Patient Protection and Affordable Care Act, an amendment in the nature of a substitute to H.R. 3590, as proposed in the Senate on November 18, 2009. Among other things, the legislation would establish a mandate for most legal residents of the United States to obtain health insurance; set up insurance exchanges through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage; significantly expand eligibility for Medicaid; substantially reduce the growth of Medicare's payment rates for most services (relative to the growth rates projected under current law); impose an excise tax on insurance plans with relatively high premiums; and make various other changes to the federal tax code, Medicare, Medicaid, and other programs. CBO and JCT estimate that, on balance, the direct spending and revenue effects of enacting the Patient Protection and Affordable Care Act would yield a net reduction in federal deficits of $130 billion over the 2010-2019 period (see Table 1). Approximately $77 billion of that reduction would be on-budget (other effects related to Social Security revenues and spending as well as spending by the U.S. Postal Service are classified as off-budget). CBO has not completed an estimate of all of the legislation's potential impact on spending that would be subject to future appropriation action. CBO and JCT have determined that the legislation contains several intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). The total cost of those mandates to state, local, and tribal governments and the private sector would greatly exceed the thresholds established in UMRA ($69 million and $139 million, respectively, in 2009, adjusted annually for inflation). CBO and JCT's assessment of the legislation's impact on the federal budget deficit is summarized in Table 1 below. Table 2 shows federal budgetary cash flows for direct spending and revenues associated with the legislation. Tables 3 and 4 provide estimates www. cbo.gov

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