How the Health Care Bill Is Financed March 26, 2010 Gerald Prante Gerald Prante Today, we posted a graph showing how the $938 health care bill that was passed by Congress and signed into law by Pres. Obama is set to be financed over its first 10 years. Because we did it in the form of a pie chart, we aggregated many of the smaller categories into larger categories that were similar to one another. This was especially true for the “Cuts to Medicare” and “Other Revenue Provisions” category. In this blog post, I provide a more detailed look at the major components of these two categories, using CBO and JCT numbers. Most of the cuts to Medicare are reductions in payments to providers of Medicare. The proponents of such cuts essentially argue that the providers are currently earning large rents from their services (i.e. getting paid far in excess of what they would be willing to actually accept). Critics of these cuts contend that many of these providers are “on the margin,” and will thereby stop treating Medicare patients as a result of these cuts. Main Components in Net Cuts to Medicare ($416.5 billion) Reductions in annual updates to Medicare FFS payment rates = $196 billion cut Medicare Advantage rates based upon fee-for-service rates = $136 billion cut Medicare Part D “donut hole” fix = $42.6 billion increase Payment Adjustments for Home Health Care = $39.7 billion cut Medicare Disproportionate Share Hospital (DSH) Payments = $22.1 billion cut Revision to the Medicare Improvement Fund = $20.7 billion cut Reducing Part D Premium Subsidy for High-Income Beneficiaries = $10.7 billion cut Interactions between Medicare programs = $29.1 billion cut Main Components in Other Provisions ($149 billion) Associated effects of coverage provisions on revenues = $46 billion Exclusion of unprocessed fuels from the cellulosic biofuel producer credit = $23.6 billion Require information reporting on payments to corporations = $17.1 billion Raise 7.5% AGI floor on medical expenses deduction to 10% = $15.2 billion Limitations to the use of HSAs, MSAs, FSAs, etc. = $19.4 billion Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Center for Federal Tax Policy Business Taxes Individual and Consumption Taxes Tags Health Care
