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Letter to the Honorable Jeff Sessions 1 (January 2010)

handle is hein.congrec/cbo9378 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 January 22, 2010 Honorable Jeff Sessions United States Senate Washington, DC 20510 Dear Senator: This letter responds to questions you posed about the Congressional Budget Office's (CBO's) analysis of the effects of H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as passed by the Senate on December 24. In particular, you asked for clarification on several issues regarding the effect of the legislation on the Hospital Insurance (HI) trust fund, from which Medicare Part A benefits are paid. Your questions focused on the budgetary impact of the provisions of PPACA that would extend the solvency of the HI trust fund, presumably either by increasing revenues to or decreasing expenditures from that trust fund. Some specific provisions of PPACA can be identified as having such effects. However, some of those provisions would have effects beyond the HI trust fund (such as provisions addressing Medicare Advantage plans, which are paid for from both the trust fund and the Treasury's general fund), and other provisions in the act would affect the trust fund indirectly through their impact on taxable income. Because of those complexities, this letter does not address the possible impact of removing from the act all of the provisions that would affect the HI trust fund, but, rather, summarizes the net effects of the act as a whole on the trust fund. Budgetary Impact of the Legislation On the basis of the economic forecast and technical assumptions in CBO's March 2009 baseline, CBO projected that, under current law, the HI trust fund would be exhausted-that is, the balance of the trust fund would decline to zero-during fiscal year 2017. Enacting PPACA, including the manager's amendment, would reduce net outlays for Part A of Medicare by $245 billion over the 2010-2019 period relative to that baseline, CBO estimates. Enacting that legislation would also increase HI payroll tax receipts by about $113 billion over that period, according to estimates by CBO and the staff of the Joint Committee on Taxation (JCT). Together, those changes in outlays and revenues would diminish budget deficits and add to trust fund balances by $358 billion over that 10-year period. Given those changes in the financial flows of the trust fund, CBO estimates that the HI trust fund would have a positive balance of about $170 billion at the end of fiscal year 2019. www.cbo.gov

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