This evening (Saturday), debate on the health care reform bill propose by Senate Majority Leader Harry Reid and Senate Democrats will commence. Late Wednesday night, the Congressional Budget Office released its report on the proposed piece of legislation: the gross price tag for the coverage provisions is $848 billion. It would cut the deficit by $130 billion if fully enacted, according to CBO estimates. The main financing mechanisms would be cuts to Medicare, a new excise tax on high-valued “Cadillac” health insurance plans, a 1/2 percentage point increase in the Medicare taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. rate for high-income earners, and various tax hikes imposed on the health care sector including fees on manufacturers and insurance companies.
Meanwhile, the CBO has released an update to its estimate of the House health care bill that passed two weeks ago. That House health care reform bill’s financing differs from the version outlined by Senate leadership. In addition to the House bill having a larger gross price tag (over $1 trillion), the House bill is financed largely via a surtax on high-income taxpayers, which the Senate bill does not include. Furthermore, the House bill has more cuts to Medicare than the Senate bill, although the Senate bill does cut more non-Medicare spending than the House bill.
For a pie chart comparison of how the two bills are financed, click here for the Senate bill and click here for the House bill. The table below also presents the data that is in the pie chart.
Note that all figures are from the most recent CBO scores of the two bills. Totals may not add up due to rounding.
| Financing Mechanism | Senate Bill (as proposed by Reid) |
House Bill (as passed by the House) |
| Medicare Cuts to Providers (Net) | $331 billion | $440 billion |
| Other Health Care Spending Cuts (Net) | $150 billion | $14 billion |
| Surtax on high-income taxpayers | $0 | $460 billion |
| Excise Tax on Cadillac Plans | $149 billion | $0 |
| Fees/Taxes on Medical Devices, Manufacturers & Insurers | $102 billion | $22 billion |
| Penalties on Individuals/Businesses for no insurance | $36 billion | $168 billion |
| Other Taxes and Revenues | $156 billion | $88 billion |
| Increase in Medicare Tax Rate for high-wage earners | $54 billion | $0 |
| Gross Price Tag | $848 billion | $1,052 billion |
| Deficit Reduction | $130 billion | $138 billion |