• CBO Estimates that Defunding Health Reform Will Add $5.7 Billion to the Deficit over the Next Ten Fiscal Years
  • March 17, 2011 | Author: Lora L. Greene
  • Law Firm: King & Spalding LLP - New York Office
  • On March 10, 2011, the Congressional Budget Office (CBO) released a letter to the Chairman of the House Subcommittee on Labor, Health and Human Services, Education and Related Agencies, describing the budgetary impact of section 4017 of H.R. 1, the Full-Year Continuing Appropriations Act of 2011, which was passed by the House of Representatives on February 19.  Section 4017 would prohibit the use of any funds appropriated in H.R. 1 to carry out the provisions of the Patient Protection and Affordable Care Act (PPACA) and the Reconciliation Act.  As stated in its letter, the CBO and the Joint Committee on Taxation (JCT) estimate that defunding PPACA and the Reconciliation Act would reduce the deficit by about $1.4 billion in fiscal year 2011 but would increase spending by $3.1 billion in fiscal year 2012 and by smaller amounts in each of the fiscal years 2013 through 2021. CBO and JCT estimate that the net additional costs would total $3.9 billion over the 2011-2016 period and $5.6 billion over the 2011--2021 period.  In addition, the CBO and JCT estimate that the prohibition would reduce federal revenues by $0.1 billion over both 2011-2016 and 2011-2021 periods.

    Overall, the CBO and JCT expect that the prohibition on use of funds provided in H.R. 1 would affect spending and revenues through four mechanisms:

    • Delaying completion of regulatory processes for ongoing programs (such as establishing payment rates for Medicare services furnished during 2012);
    • Delaying the implementation of new programs and quality initiatives, many of which require significant research and development activities before savings can be realized;
    • Preventing or delaying the obligation of funds for grant programs; and
    • Reducing compliance with changes to the tax code (and other revenue effects from delayed regulatory implementation.

    The CBO and JCT, however, did note that “[t]he budgetary effects of [section 4017] are highly uncertain and depend largely on how the Administration would interpret the legislation -- in particular, how broadly or narrowly the Administration would define what is meant by ‘carrying out’ the provisions of [PPACA and the Reconciliation Act.]”