Confused by the recent health reform impacts released by CMS Chief Actuary Richard Foster with those released from CBO? Well, who wouldn’t be? A little over 5 weeks ago, CBO released its long-anticipated estimate of the final health reform legislation—not only did the cost of the bill come in at under one trillion dollars, but the legislation also held the promise of reducing the federal deficit by $143 billion over 10 years. Three days later, the House passed H.R. 3590 and the rest is history.
Then last week, CMS’ Office of the Actuary released its amended estimate of the financial effects of the health reform legislation. Within the 38-page document, one line in particular has been cited repeatedly by bloggers and other media outlets—i.e., the national health expenditure would increase by $311 billion, or 0.9 percent. If CMS is right, does this mean CBO got it wrong? Well, not really and the answer isn’t as simple as it ought to be.
While I am certain that both CBO and CMS use models more complicated than I can comprehend to come up with their projections and thus, won’t attempt to explain the difference in their conclusions, there are at least three things I can think of that can be helpful if you are trying to reconcile these two estimates.
- One, CBO only estimates the impact on the federal budget; whereas CMS’ estimate also includes the impact on state and local governments, private health insurance, among others.
- Two, CBO estimates are based on the federal fiscal year and CMS estimates are based on the calendar year.
- Three, CBO’s estimated effects of the coverage provisions differed from CMS’ projections. For example, CBO estimated that there would be 54 million uninsured people under current law by 2019; CMS estimated 57 million. CBO’s estimated that 16 million people would be eligible for Medicaid & CHIP by 2019; CMS estimated 18 million. CBO also estimated that 32 uninsured people would gain coverage; CMS estimated 34 million.
Given these differences and probably many others, which will hopefully become clearer when CMS releases its assumptions and methodology in the coming weeks, I think I will end with these two thoughts. First, these estimates are produced for different purposes and use different assumptions. Second, both the CBO Director and the CMS Chief Actuary agree that the actual future impacts on health expenditures, insured status, individual decisions, and employer behavior are very uncertain.