An audible gasp went around Washington last week when the Congressional Budget Office (CBO) released its first estimate of the cost of healthcare reform: $1 trillion. The cost seemed all the more eye watering given that it would only cut the numbers of uninsured Americans by 16 million or around a third of the total uninsured population.  
The estimate is based on Affordable Health Choices – a bill of over 600 pages released by the Senate Health Education, Labor and Pensions (HELP) Committee chaired by Senator Ted Kennedy. A central feature of the bill is the introduction of grants from the federal government to states to set up health insurance gateways that would allow individuals to buy insurance at an affordable price and would subsidise the cost of insurance premiums for those on low incomes. This is one version of a proposal that has gained wide acceptance as a way of achieving universal coverage over the last two years. But the subsidies turn out to be the most expensive part of the proposal and it is unlikely that the final version of any health reform legislation will be able to afford subsidies up to 500 percent of the federal poverty level, or £67,000 a year, as the current bill does.
 
More problematic than the cost of the HELP bill is the fact that only a third more people end up being covered, according to the CBO’s estimates . This is because, although 39 million gain insurance through the proposed gateways, 15 million people who currently have employer-based insurance lose it and a further 8 million with other sources of insurance are also dropped. This is reminiscent of John McCain’s healthcare tax credit proposal during the election campaign in which almost as many people lost as gained insurance, leaving the country little better off.
 
Alongside the creation of insurance gateways, the HELP bill contains a raft of other proposals: possible expansion of Medicaid, a public plan with mandatory benefits, investment in prevention, a medical home demonstration project, workforce investment and more health information technology. Overall, it is easy to see how costs will grow and hard to discern significant savings.
   
This week the House of Representatives released a health reform bill which is most significant for being 200 pages longer than the HELP committee bill. Perhaps the most anticipated set of proposals will come from the Senate Finance Committee because it has jurisdiction over the major public healthcare programs such as Medicaid and Medicare. Its bill was due to be published shortly after the HELP Committee’s but it seems that the magnitude of the CBO estimate has sent committee staff back to the drawing board. They are all too aware that more estimates in the trillions without any real savings to offset them will stop healthcare reform in its tracks.
Vidhya Alakeson is a former Harkness fellow.