(CNSNews.com) – The health-care bill that the Senate Finance Committee will vote on today will cost a total of $829 billion over 10 years, with $507 billion of that cost being covered by new federal taxes and fees, according to the Congressional Budget Office (CBO).
On Oct. 7, the CBO released a report on the budget impact of the “chairman’s mark” summary of the bill that the Finance Committee is set to vote on today. Based on the document it was given, the CBO found that the bill would reduce the federal budget deficit by $81 billion over 10 years. That estimate was based on the calculation that, if enacted, the bill would bring in $480 billion in new tax revenues and $27 billion in fees.
These new taxes and fees include:
-- $201 billion in new taxes on high-premium health care plans.
-- $83 billion in new taxes paid by workers who will receive less employer-sponsored coverage or lose that coverage altogether but will be compensated with higher wages or monetary benefits, which are taxable.
-- $23 billion in penalty fees paid by employers who do not comply with the federal insurance mandate.
-- $4 billion in penalty fees paid by individuals who don’t have health insurance.
-- $16 billion in new income and Medicare payroll tax revenue due to changes in Medicare.
-- $180 billion in other tax revenues items calculated by the non-partisan Joint Committee on Taxation (JCT).
According to the JCT, this $180 billion in new taxes would include: A new tax on prescription drug makers that would account for $22.2 billion over 10 years; a new tax on medical device manufacturers that would bring in $38.6 billion; and a new annual tax on insurance companies would net the government $60.4 billion.
Also, a provision that raises the threshold at which medical expenses become tax deductible, from 7.5 percent of income to 10 percent of income, would reportedly yield the government $15.2 billion in new revenue from sick and disabled Americans with high out-of-pocket medical costs.
It would also include $5.4 billion derived from changing the definition of a deductible medical expense for health savings accounts; $14.6 billion from limiting to $2,500 the tax-deductible amount in flexible spending arrangements between employers and employees; $17.1 billion in revenue from expanded requirements (and potential penalties) on corporate reporting of taxable payments to other parties; and $5.4 billion from sponsors of Medicare Part D plans who are no longer able to deduct subsidies paid by the government to those plans.
The overall bill would cost $829 billion, according to the CBO, the cost of which apparently would be covered by a combination of savings, taxes, and penalties. The CBO said that the Baucus bill (currently in summary form, not final legislative language) would probably achieve $404 billion in spending cuts and other savings, largely through cuts to Medicare payments to physicians and to the Medicare Advantage insurance programs. The costs would come primarily from generous federal health insurance subsidies and entitlement expansions.